Nasdaq 100 Forecast: QQQ falls after META, MSFT earnings & inflation data

US futures

Dow future -0.59% at 41944

S&P futures -0.81% at 5769

Nasdaq futures -1.2% at 20158

In Europe

FTSE -1% at 8080

Dax -0.54% at 19157

Stocks slip after sticky inflation data
Jobless claims are stronger than expected
Meta & Microsoft warn on costs &outlook
Oil steadies after yesterday's gains

US core PCE is unchanged, Meta & Microsoft fall

U.S. stocks are falling as the markets weigh up big tech earnings and US inflation data and look ahead nervously to the US elections.

Data today showed that core PCE, the Fed’s preferred gauge of inflation, remained unchanged in October at 2.7%, defying expectations of a fall to 2.6%. Personal spending also rose more than forecast, and jobless claims were stronger than expected.

The data comes ahead of tomorrow's non-farm payroll report, which could provide more clarity on how the labor market is holding up after ADP payrolls smashed expectations and JOLTS job openings, were weaker than expected.

This week’s data isn’t likely to change expectations that the Federal Reserve will cut interest rates by 25 basis points next week. However, persistently strong data could see the market lower Fed rate cut expectations beyond that.

With just a few days to go until the US elections nerves are starting to show. In the opinion polls, Republican Donald Trump and Democrat Kamala Harris remain neck and neck, although the financial markets and some betting odds have been leaning towards a Trump victory.

Earnings continue to roll in, with Meta and Microsoft warning over rising costs associated with AI, highlighting some risks to the AI trade.

Corporate news

Mesa is falling after reporting Q3 earnings despite beating on both the top and bottom lines. EPS was $6.03 on revenue of $40.59 billion. However, Meta reported weaker-than-expected user numbers, with its third quarter of $3.29 billion daily active users below the $3.31 billion forecast. The company also warns that capital expenditures related to AI investments are expected to continue to grow significantly in 2025.

Microsoft is falling despite beating forecasts on the top and bottom lines. EPS rose $3.30 on revenue of $65.59bn. However, the company forecast slower-than-expected growth as outside suppliers won’t be able to meet demand. Microsoft also warned of rising costs for AI,

Nasdaq 100 forecast – technical analysis.

The Nasdaq trades within a rising triangle. The price has fallen away from yesterday’s high of 20650, and is testing the rising trendline support of the tringle. A break below here opens the door to 20k. Should sellers take out this support, a lower low is created. Should buyers defend the support level, a rise back towards 20,650 and 20,750, the record high, could be on the cards.

FX markets – USD falls, EUR/USD rises

The USD is falling but remains near its 3-month high. US core PCE was hotter than expected, and jobless claims rose less than forecast. The market still expects the Fed to cut rates by 25 basis points next week and gradually reduce them going forward.

.r to 2% YoY up from 1.7% and ahead of forecasts of 1.9%. This comes after GDP data yesterday showed the eurozone economy grew at a faster pace than expected. The market has reined in outsized ECB rate cuts for the December meeting.

GBP/USD is rising after yesterday's losses as the market continues to digest the labor Budget. Rachel Reeves announced £40 billion in tax cuts and the second-largest fiscal tightening on record. The higher borrowing and inflationary measures mean that the market has reined in BoE rate cuts.

Oil steadies after yesterday's gains

Oil prices are holding steady on Thursday after rallying yesterday following stronger than expected US fuel demand and reports that OPEC+ could delay the winding down of its voluntary output cuts.

US gasoline stockpiles fell more than expected to a two-year low for the week ending October 25th, while crude inventories registered a surprise drawdown.

Meanwhile, OPEC+ may delay the planned oil production increases from December by a month or more amid concerns over the soft demand and rising supply of the oil market. A decision is expected to be reached next week.

Meanwhile, the demand outlook in China improved as the world's biggest oil importer, so manufacturing activity expanded for the first time in six months, implying that stimulus measures are having an impact.

The conflict in the Middle East remains in focus, and optimism about de-escalation is adding pressure to oil prices.

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