Nasdaq 100 Forecast: QQQ steady after Nvidia’s rally & ahead of Fed Chair Powell speech

US futures                                         

Dow futures 0.10%, S&P futures -0.01%  & Nasdaq futures -0.01%

In Europe

FTSE 0.12% & DAX 0.41%

• US steady around record highs ahead of Powell’s speech
• Nvidia announced $100 billion investment in OpenAI
• US PMI data is expected to show activity slowed modestly
• Oil rises as Kurdistan oil export agreement stalls

Stocks ease from another record high

U.S. stocks are poised for a broadly flat open on Tuesday, following a tech-driven rally that drove U.S. indices to record closing highs for a third consecutive session, and as investors await comments from Federal Reserve Chair Jerome Powell on the economy.

Fed Powell’s Speech comes as the markets continue to weigh up conflicting signals from the Fed over the forward path for interest rates. While the Fed cut rates by 25 basis points last week and the dot plot pointed to two further rate cuts this year, Fed speakers yesterday were cautious about further cuts, while newly appointed Stephen Miran, who had voted for a large 50 bps cut, warned about harming the labour market if rates were cut too slowly.

The market is pricing in a 90% probability of a rate cut in October.

Attention will also be on US PMI data, which is expected to show that the services PMI eased to 53.9 from 54.5, and the manufacturing PMI eased to 52 from 53. Stronger-than-forecast growth could slightly cool rate cut expectations, pulling stocks lower.

US stock indices have risen over 3% this month, a month that is typically weak for equities. Part of the resilience seen in stocks has been due to renewed optimism surrounding the AI narrative.

Corporate news

Nvidia is falling 0.7% after hitting an intraday record high yesterday, above $184, and closing 4% higher. The stocks surged after the company announced that it would invest up to $100 million in OpenAI. The move will help expand the number of data centers needed to power ChatGPT, which now boasts 700 million weekly global users.

Micron Technology rises 1% ahead of the chip maker's quarterly results, which will offer more insight into the trajectory of the AI boom.

Boeing is rising over 2.5% after the US ambassador to China said the US and China are in the final stages of agreeing on a massive order from the US aircraft manufacturer.

Nasdaq 100 forecast – technical analysis

The Nasdaq 100 trades within a rising channel reaching a record high of 24,780. The RSI is deeply overbought, so a pullback or consolidation could be on the cards, providing an opportunity to buy the dip. Buyers will look to extend gains towards 25,000. Support can be seen at 24,000, last week’s low, and the August high. A break below here negates the near-term uptrend and opens the door to a deeper selloff towards 23,500.

FX markets – USD flat, EUR/USD falls

The USD is holding steady after losses yesterday, as the market awaits further clues from Federal Reserve Chair Jerome Powell. Fed speakers yesterday suggested caution surrounding rate cuts, giving the market pause for thought.

The EUR/USD is falling after mixed PMI data from the Eurozone and Germany. Eurozone business activity rose to a 16-month high in September as the composite PMI rose to 51.2, marking the 9^th month of expansion. While the service sector expanded by more than expected, manufacturing activity returned to contraction.

The GBP/USD is unchanged above 1.35 despite weaker-than-expected PMI data. The composite PMI fell to 51, down from 53.5 in August, not far above the 50 level that separates expansion from contraction. The slower activity comes amid a loss of confidence ahead of November’s budget.

Oil rises as Kurdistan oil export agreement stalls

Oil prices are rising as investors weigh the global supply outlook following a slowdown in Iraq and the Kurdish regional government's agreement to restart an oil pipeline, and amid Ukraine's strikes on Russian oil infrastructure.

An agreement between Iraq and the Kurdish regional governments to resume exports of 230,000 barrels per day from Iraqi Kurdistan has stalled at the 11^th hour. Exports have been suspended since 2023, and the deal to restart them has stalled.

Meanwhile, upside in oil prices could remain capped as OPEC+ continues to increase production, while demand growth slows.