Nasdaq 100: FOMC meeting outcome includes steady rates and a dot plot tweak

FOMC hold, dot plot tweak, and Powell’s dovish touch

It was an FOMC (Federal Open Market Committee) hold as anticipated, with little change to its statement, but looking at their forecasts, there were revisions. GDP (Gross Domestic Product) is expected to be stronger this year and the next two, the unemployment rate a notch lower for this year and '26, and there's slight concern over raising core PCE (Personal Consumption Expenditures) for 2024 from 2.4% to 2.6%.

However, this didn’t impact their expectations of three rate cuts for this year, after fears that hotter pricing data released last week might reduce it to only two. And while they anticipate only three rate cuts next year instead of four (and a higher rate in the longer run), markets took it positively. This was further encouraged in the press conference thereafter with Chairman Powell stating that "at some point this year" it'll be appropriate to cut, and for its balance sheet "to slow the pace of run-off fairly soon".

Treasury yields finished the session lower, except for the furthest end (long-run projections higher), breakeven inflation rates slightly higher, and market pricing (CME's FedWatch) sticking with the first rate cut in June but by a healthier majority.

Otherwise, in terms of data, the weekly mortgage applications suffered a 1.6% drop after a decent positive print the week before. We've got the weekly claims to look forward to next, after which preliminary PMIs (Purchasing Managers' Index) and existing home sales.

Nasdaq technical analysis, overview, strategies, and levels

Sector performance by the close showed all were in the green except for health and energy with limited losses, and on top, it was consumer discretionary and communication with tech in the middle enjoying decent gains. The net result was a stronger finish for this tech-heavy index compared to both Dow 30 and S&P 500 (both of whom enjoyed record highs).

The positive moves yesterday eventually breached its previous 1st Resistance level, favouring conformist buy-breakout strategies (and in both daily and weekly time frames) and helped tilt an at-risk technical indicator on the daily timeframe from neutral to green, with less required to get a couple more to join in. All in all, it remains a ‘bull average’ technical overview for both the daily and weekly timeframes, where the gains in the futures market aren’t too far off today’s 1st Resistance level.

IG client* and CoT** sentiment for the Nasdaq

The price increases have naturally resulted in retail traders' sell bias rising, moving from a majority short position of 64% yesterday to a heavy sell at 67%. It's more pronounced in the S&P 500 at 73%, and in extreme short territory for the Dow at 86%. As for Commitment of Traders (CoT) speculators, according to last Friday's report, they shifted from a slight buy position of 51% to a more neutral stance, but have increased their net long bias in the DJIA to 69%.

Nasdaq chart with retail and institutional sentiment

• _{*The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 8am for the outer circle. Inner circle is from the previous trading day.}
• _{**CoT sentiment taken from the CFTC’s Commitment of Traders report, outer circle is latest report released on Friday with the positions as of last Tuesday, inner circle from the report prior.}