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Nasdaq 100 Forecast: QQQ rises after GDP data & despite Nvidia's decline

Article By: ,  Senior Market Analyst
August 29, 2024 2:37 PM

US futures

Dow future 0.71% at 41349

S&P futures 0.355% at 5613

Nasdaq futures 0.45% at 19433

In Europe

FTSE -0.24% at 8329

Dax 0.57% at 18800

  • Nvidia falls despite beating on earnings & revenue
  • US GDP was upwardly revised to 3%, easing recession fears
  • Oil steadies after 2-days of losses

Stocks rise after GDP data ease recession fears

U.S. stocks are pointing to a stronger start as investors consider an upward revision to GDP, jobless claims data, and Nvidia's results.

US GDP figures were upwardly revised, showing that the US economy grew 3% annualized in the second quarter, up from 2.8% in the preliminary reading and up from 1.4% in Q1. The upward revision supports the view that the US economy is still on track for a soft landing, easing recession worries that sparked a selloff at the start of the month.

US jobless claims are also a closely watched macro data point since Federal Reserve chair Jerome Powell said on Friday that the central bank is more concerned about risks to the labour market than inflation easing to 2%.

US jobless claims eased to 231k, down from 233k. The slight improvement also helped to ease recession worries spurred by a weak NFP report on August 5.

This comes as the market is pricing in the 100% likelihood that the Fed will cut rates in September, although the size of the rate cut is up for debate. The market sees a 32% chance of 50 basis points.

Attention will now start to turn towards tomorrow's core PCE data, which is expected to show that the Fed's preferred gauge for inflation rose 0.2% month over month.

Corporate news

Nvidia is set to open lower despite Q2 earnings and revenue beating forecast. Nvidia posted EPS of $0.68 above 0.64c on revenue of $30 billion ahead of a $20.6 billion expected. The AI chipmaker also guided for the current quarter's revenue of $32.5 billion. There appeared to be some disappointment surrounding margins, and after a whisper, numbers on Wall Street pointed to $33-$34 billion in revenue. Despite this, demand remains strong, and the results reiterated Nvidia’s position as the leader of AI.

Apple is set to open higher after the tech giant was seen ordering components for more iPhones than last year, suggesting that it is preparing for an AI-driven boost.

Salesforce is set to open higher after robust Q2 sales beat forecasts, and the CRM software maker raised its FY outlook.

 

Nasdaq 100 forecast – technical analysis.

The Nasdaq trades within a symmetrical triangle. The price has recovered from the 17.2k August low before running into resistance just below 20k. The price then fell back below the 50 SMA to 19k, the rising trendline support, and has recovered higher.  Buyers will need to rise above 19.7k, the falling trendline resistance, and 20k to extend the recovery further. Sellers will look to take out 19k, the round number, and rising trendline support to extend losses to 18470 the March high.

FX markets – USD rises, GBP/USD falls

The USD is recovering from a 13-month low. The US dollar had fallen sharply in recent sessions on expectations that the Fed would start cutting interest rates next month. The markets are pricing 100 basis points worth of rate cuts before the end of the year.

EUR/USD is falling as German inflation cooled more than expected, raising expectations that the ECB could cut interest rates again soon. The data comes after German data earlier this week pointed to a deteriorating economic outlook for the eurozone's largest economy. Meanwhile, eurozone inflation- will be released tomorrow.

GBP/USD is holding steady in another quiet week for UK data. Attention has been on politics this week with Sir Keir Starmer warning that the Autumn budget will be painful and after he met with the German Chancellor yesterday to reset UK-EU times

Oil steadies after a smaller than forecast draw in inventories

Oil prices held steady on Thursday after two days of losses, as concerns over output in Libya offset a smaller-than-expected draw in US inventories.

Oil prices fell over 1% yesterday after EIA oil inventory data showed that oil stockpiles fell by 846K, smaller than the 2.3 million barrel draws that had been expected.

That sell-off today is being offset by concerns over supply production in OPEC-producing company country Libya. Some oil fields in Libya have halted production owing to a clash between fractions of the government and the central bank over oil revenues.

 

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