Nasdaq 100 forecast: Stocks look cautiously to Fed Chair Powell's appearance

US futures

Dow futures +0.02% at 35920

S&P futures -0.15% at 4558

Nasdaq futures -0.3% at 15890

In Europe

FTSE +0.6% at 7480

Dax +0.4% at 16295

• Fed Powell speaks after inflation data cools
• Nasdaq 100 & S&P500 on track for best monthly gain since mid-2022
• Tesla falls as Cybertruck deliveries start
• Oil falls after OPEC+ meeting 

Fed Powell speaks after inflation data cools

U.S. Stocks are pointing to a muted start as investors look cautiously ahead to Federal Reserve Chair Jerome Powell's remarks later today.

His comments come after core PCE figures yesterday showed that inflation continues to cool, and that personal spending growth slowed. The Goldilocks data supports the view that the Federal Reserve could start to cut interest rates next year and that the US economy may avoid a hard landing.

Attention will be on Fed Jerome Powell's comment for further clues over the future path for interest rates. However, Powell is likely to play it safe and stick to the view that it's too early to claim victory against inflation, which remains above the Fed's 2% target. The Fed will be cautious of committing a major policy error of beginning to loosen conditions too soon, which could see inflationary pressures pick up again.

November has been a stellar month, with both the Nasdaq 100 and the S&P 500 set to book the strongest monthly gains since mid-2022. The rally has been based on expectations that the Federal Reserve is done raising interest rates and could start cutting next year.

The Nasdaq 100 was the top performer, boosted by the magnificent 7. The tech-heavy index is now up by 36% on the year, rebounding from a big slump in 2022.

Meanwhile, the S&P 500 is set to rise 8.4%, bringing year-to-date gains to 19%. These gains have come as the benchmark 10-year treasury yield hovers around the 4.32% mark early on Friday compared to the 16-year high of 5% in mid-October.

Looking ahead to December, seasonality supports further gains in the final month of the year, which has historically been a strong month for the stock market.

Since 1945, the S&P 500 has gained around 1.5% in December compared to 0.8% gains in the other months of the year.

Corporate news

Tesla is set to fall on the open, putting it on track for its third straight daily decline as the EV maker starts deliveries of its cyber truck. The hotly anticipated truck will be priced starting at $60,990, above the original forecast.

Alibaba's ADR is falling pre-open by 1.7% after Morgan Stanley downgraded the e-commerce giant from overweight to equal rate. Its analysts cited a slow turnaround in customer management revenue.

Walt Disney is set to rise modestly after the entertainment giant announced plans to reinstate its dividend with a 30% share payout signaling a recovery after the pandemic hit.

Nasdaq 100 – technical analysis

The Nasdaq 100 continues to consolidate around 16000. The prices trades capped on the upside by 16170 the weekly high and the downside by 15800 the August high. The bulls are showing signs of running out of steam. Sellers would need a break below 15850 to bring 15630 the September high in to focus. Buyers will look for a rise above 16170 and 16400 ahead of 16760 the 2021 peak.

FX markets – USD rises, EUR/USD falls

The USD is rising adding to gains in the previous session, but it is on track to end the week at roughly the same level that it started. All eyes are on Federal Reserve chair Jerome Powell for a Q&A session later today, which could influence the dollar.

EUR/USD is struggling to make ground above the 1.09 level after yesterday's cooler-than-expected eurozone inflation which is fueling bets that the ECB could start to cut interest rates in April next year. Today, eurozone manufacturing PMI rose to 44.2, up from 43.1, and ahead of the preliminary reading but still indicating deep contraction in the sector.

GBP/USD is rising after an upward revision to UK manufacturing PMI data to 47.2, up from 44.8 in October. The pound is on track to gain 0.25 versus the dollar this week marking the third straight weekly gain, supported by hawkish commentary from the Bank of England.

EUR/USD -0.16% at 1.0879

GBP/USD +0.11% at 1.2638

 

Oil falls after cuts disappoint

Oil prices have stabilised after a steep sell-off yesterday following the OPEC+ meeting where the cuts announced disappointed.

OPEC+ agreed to deepen current output cuts from 1.3 million barrels per day to a total of just over 2 million barrels per day however, this was short of the additional 2 million barrels per day that the market was hoping for.

Moreover, the OPEC+ production cuts appear to be voluntary rather than part of an OPEC+ agreement which draws attention to strains within the group and raises questions over whether the pledges on paper will be put into action with supply being removed from the market.

Now that the market is over the initial disappointment, these measures should be sufficient to keep the price supported above the November lows.

WTI crude trades +0.1% at $76.30

Brent trades -0.1% at $80.70