Nasdaq Forecast: QQQ rises despite the strong NFP report

US futures

Dow futures 0.18% at 38677

S&P futures 0.31% at 5164

Nasdaq futures 0.42% at 17958

In Europe

FTSE -0.7% at 7915

Dax -1.28% at 18170

• US NFP sees 303k jobs added in March vs 200k forecast
• Unemployment unexpectedly fell to 3.8% & wages rose 0.3%
• Yields & the USD tick higher
• Oil rises for a second week on escalating Middle East tensions

NFP reports smashes expectations

US stocks point to a rise on the open after the steep sell-off in the previous session, which saw the Dow plunge over 500 points and as investors digest the latest U.S. jobs report.

The March non-farm payroll was significantly stronger than expected, raising more questions about the Fed’s ability to cut rates three times this year.

The US economy saw 303K jobs added in March, well above the 200K forecast and up from the downwardly revised 270 K in February. Meanwhile, the unemployment rate unexpectedly ticked up to 3.8%, down from 3.9%, and average hourly earnings rose 0.3%, up from 0.2%.

The strong jobs report suggests that the Fed can be patient, keeping interest rates high for longer. The solid numbers will dampen expectations of the Fed starting to cut interest rates sooner rather than later with treasury yields climbing across the curve.

Following these numbers, it would be difficult for the Fed to argue in favor of a rate cut if it is really data-dependent. The market is now fully pricing in the first cut in September rather than July as it reflects on the data and sees the Fed having more time on its hands before cutting rates.

The data comes after mixed messages this week from Federal Reserve policymakers. Yesterday, Neel Kashkari said that two rate cuts this year may not be necessary if inflation remains sticky. His comments came after Federal Reserve chair Jerome Powell said early in the week that the Fed was still supporting rate cuts this year, although he did not indicate the scale or the timing.

U.S. economic data this week has also been mixed with soft services activity reports and a more robust manufacturing report.

Meanwhile, investors will continue to monitor developments in the Middle East amid mounting tensions.

Corporate news

Apple is set to rise 0.5% on the open after the iPhone maker announced it will lay off more than 600 workers in California, marking its first significant job cuts since the pandemic.

Netflix is pointing to a 1% rise after a price target upgrade to buy unless at Pivotal Group, which also kept its buy rating, citing ongoing momentum in its core business.

Krispy Kreme is set to rise by 5.3% after Piper Sandler upgraded its position on the doughnut chain from overweight to neutral, thanks to its partnership with McDonald's.

Advanced Micro Devices is set to rise 1.5% on the open as the chip maker rebounds from an 8% fall in the previous session.

Nasdaq forecast – technical analysis.

The Nasdaq has fallen away from the all-time high of 18466 but continues to trade within range. The price found support at 17860, just above the 50 SMA, and the 17760 the March low. A break below this zone could support a steeper selloff to 17160 the February low. Meanwhile, on the upside, buyers could look to rise above the 20 SMA at 18150 towards 18466 and fresh all-time highs.

FX markets – USD rises, EUR/USD falls

Following the hot jobs data, the U.S. Dollar is spiking higher with yields. The market is pushing back on rate cut expectations as the US labor market shows few signs of slowing.

EUR/USD is falling on USD strength and after weaker-than-expected data from the eurozone.  Retail sales fell -0.5% MoM in March after a downwardly revised 0% in February. The data highlights weakness in consumption as households remain squeezed. Meanwhile, German factory orders also rose less than expected, increasing by 0.3 %MoM after dropping 11.3% in the previous month.

GBP/USD is falling from 1.26 on USD strength amid a quiet UK economic calendar.

Oil rises across the week on geopolitical

Oil prices are holding steady at a five-month high and are on track to gain almost 4% this week, adding two 3% gains in the previous week.

Oil prices have climbed higher amid escalating tensions in the Middle East on fears that Iran is being drawn into the Israel-Hamas war. Geopolitical tensions have ramped up in the region after Iran said it would retaliate against the attack against Iran's embassy in Syria.

Oil is also pushing higher following the OPEC ministerial meeting earlier this week when ministers voted to maintain output cuts and recommended that some members increase their adherence to supply cuts.