Nasdaq 100 Forecast: QQQ reaches record highs on Fed rate cut optimism
U.S. stocks are poised for a stronger start, with the Nasdaq 100 and the S&P 500 on track to reach new record highs, a day after weaker-than-expected private payroll data boosted hopes for further Fed rate cuts, despite the ongoing U.S. government shutdown.
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US futures
Dow futures -0.07%, S&P futures 0.28% & Nasdaq futures 0.60%
In Europe
FTSE 0.01% & DAX 1.2%
- US stocks rise on rate cut optimism & despite the shutdown
- US jobless claims won’t be released
- Tesla rises on expectations of stronger deliveries
- Oil has fallen 6% so far this week
Stocks reach record highs
U.S. stocks are heading for a stronger start, with the Nasdaq 100 and the S&P 500 on track to reach fresh record levels, a day after weaker-than-expected private payroll data boosted hopes of further Fed rate cuts.
Rate cut optimism has underpinned the recent rally, and yesterday's unexpected fall in ADP payrolls reinforced expectations for a rate cut in October.
However, the ongoing U.S. government shutdown means that economic data will be lacking over the coming sessions. Today’s weekly jobless claims report will be the first casualty of the shutdown, whilst tomorrow's nonfarm payroll report is not expected to be released, nor will next week's CPI inflation figures.
In effect, this means that the Federal Reserve is operating almost blindly, which, if prolonged, could harm sentiment.
Corporate news
Tesla is rising 1.7% ahead of the EV's quarterly delivery reports, with analysts warning that the US tax credit expiry may have front-loaded demand.
Apple is rising after Morgan Stanley raised its price target, citing a stronger-than-expected start to the iPhone 17 cycle.
Stellantis has jumped 7% after Morgan Stanley said the carmaker is starting to show a turnaround in its market share, with U.S. sales gaining momentum in September.
Nasdaq 100 forecast – technical analysis
The Nasdaq has risen above 24,780 to a fresh record high at 24,950. The price trades within a rising channel, although the RSI has tipped into overbought territory. Consequently, some consolidation could be on the cards, but the uptrend remains very much intact. Buyers will look to rise above 25,000, the psychological level, and extend gains towards 25,500 as the next logical target. Last week’s low at 24,300 could offer minor support, and below here, 23,970, the August high comes into focus.
FX markets – USD falls, EUR/USD rises
The USD is falling, weighed down by ongoing concerns surrounding the US government shutdown and follow-through selling after yesterday's weak ADP jobs data.
EUR/USD is rising against the weaker U.S. dollar despite an unexpected increase in the eurozone's jobless rate. Unemployment in the region rose to 6.3% in August, up from 6.2% in July, although this remains close to record lows. The data is not expected to have a significant impact on the ECB policy outlet.
The GBP/USD remains unchanged below 1.35 despite USD weakness, as Bank of England officials have started to express concerns over the cooling UK economic outlook. BoE Deputy Governor Sarah Breeden warned that tight monetary policy conditions could result in inflation undershooting the 2% target.
Oil has fallen 6% so far this week.
Oil is falling for a fifth consecutive session and is already trading over 6% lower so far this week. The price has dropped to its lowest level since early June, as supply concerns linger and US inventories rise.
OPEC+ is expected to agree to increase oil production by up to 500,000 barrels per day in November, three times the increase agreed for October. The prospect of additional supply is weighing on the oil market.
Meanwhile, the data on Wednesday showed that US crude oil, gasoline, and distillate inventories rose last week as demand and refining activities decreased. Crude oil inventories rose by 1.8 million barrels in the week that ended September 26.
On the other hand, offering some support to the oil market, the G7 finance ministers agreed on Wednesday to take steps to increase pressure on Russia by targeting those who continue to purchase Russian oil.
The US has also agreed to supply long-range missiles to Ukraine, which could help with the attack on Russian oil infrastructure.
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