Wall Street Wrap: “Good news is bad news” kept US indices on the backfoot
Stronger-than-expected US job openings and factory goods orders joined the recent run in robust economic data to challenge the upcoming pace of Fed’s policy easing.
Market Recap
The “good news is bad news” mantra continued to play out in Wall Street overnight, as stronger-than-expected US job openings and factory goods orders joined the recent run in robust economic data to challenge the upcoming pace of Federal Reserve (Fed)’s policy easing. The debate of whether we will see cumulative 75 basis point (bp) rate cut or 50 bp rate cut this year runs on, although follow-up comments from Fed officials seem to suggest that it will have to take much more to sway their views for imminent policy easing.
In their overnight comments, both Fed officials, Loretta Mester and Mary Daly, maintained their view for three rate cuts as the likely scenario for 2024, somewhat aligning with the Fed Chair Jerome Powell’s views that inflation will be on a "bumpy path" towards the central bank's 2% inflation goal. Market rate expectations saw a slight lean towards a June rate cut with a 62% odd (versus 57% at the start of the week), but with the US 10-year Treasury yields briefly touching its highest level since November 2023, major US indices struggled to pare back much gains for now.
Look-ahead: US services PMI
With the surprise expansion in the US manufacturing sector this week, eyes will be on whether the economic resilience will be mirrored in services activities as well. Past historical recessions in the US tend to be marked by its services activities in contractionary territory, so as long as we do not see it happen, the odds may continue to lean towards a soft-landing scenario.
However, with the “good news is bad news” narrative in place, markets will be hoping to see a softer read. Current market consensus is for US services Purchasing Managers’ Index (PMI) to remain in expansion at 52.7, a slight uptick from the previous 52.6 in February. Focus will also be on the prices paid by the firms to offer some reassurances if inflation trend will continue to slow.
What to watch: Nasdaq 100 retesting upward trendline support
The Nasdaq 100 index is back to retest an upward trendline support in place, with its daily relative strength index (RSI) potentially facing a point of reckoning ahead by flirting with its key 50 level. Since November 2023, the daily RSI has managed to defend the mid-line, which keeps buyers in control of the upward trend. Should the trendline support fail to hold, the index may potentially move to retest the 17,800 level next. On the upside, the all-time high at the 18,468 level will remain as key resistance to overcome.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Act on share opportunities today
Go long or short on thousands of international stocks with spread bets and CFDs.
- Get full exposure for a comparatively small deposit
- Trade on spreads from just 0.1%
- Get greater order book visibility with direct market access
See opportunity on a stock?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See opportunity on a stock?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade a huge range of popular stocks
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on a stock?
Don’t miss your chance. Log in to take advantage while conditions prevail.
Live prices on most popular markets
- Equities
- Indices
- Forex
- Commodities
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
