STOCK MARKET FORECAST: NASDAQ COMPOSITE MIRRORING TREASURY YIELDS, INFLATION FEARSNasdaq worth motion pressured throughout Friday morning commerce
STOCK MARKET FORECAST: NASDAQ COMPOSITE MIRRORING TREASURY YIELDS, INFLATION FEARS
- Nasdaq worth motion pressured throughout Friday morning commerce as Treasury bond yields soar
- Flash US PMI knowledge simply launched by IHS Markit exhibits enterprise exercise accelerating in Could
- Treasury yield volatility surrounding inflation and Fed taper fears to dominate danger developments
The Nasdaq Composite appears more likely to begin receding from session highs within the wake of sturdy US PMI knowledge crossing market wires shortly after the opening bell on Wall Avenue. Shares would possibly battle to take care of positive aspects notched earlier within the week as buyers shift focus again to the menace of Fed tapering. The flash US PMI survey for Could blew previous consensus forecast with enterprise exercise displaying an “unprecedented enlargement.”
As detailed on the DailyFX Financial Calendar, the headline PMI determine jumped to 68.1 from 63.5 reported in April. The composite PMI, manufacturing PMI, and companies PMI all hit their respective highest readings on document. It was additionally highlighted, as soon as once more, how value pressures proceed to mount. The speed of enter worth inflation soared to a brand new survey document excessive and contributed to the sharpest rise in output prices since knowledge assortment started in 2009.
Whereas sturdy financial progress is extensively welcomed, the tempo of the restoration might give Fed officers a headache. Main inventory indices just like the Nasdaq, S&P 500, and Dow would possibly face renewed headwinds as properly. That is contemplating current FOMC minutes, which famous that “plenty of contributors instructed that if the economic system continued to make speedy progress towards the Committee’s objectives, it is perhaps applicable sooner or later in upcoming meetings to start discussing a plan for adjusting the tempo of asset purchases.”
NDX – NASDAQ PRICE CHART: DAILY TIME FRAME (26 OCT 2020 TO 21 MAY 2021)
Chart by @RichDvorakFX created utilizing TradingView
That stated, Nasdaq worth motion seems to be going through some pushback round its 20-day easy shifting common. This technical barrier across the 13,500-price degree would possibly cap potential advances by the Nasdaq. If inventory market bears begin to wrestle again management right here and notch an in depth beneath the 50-day shifting common, that might open up the door to additional promoting strain. The Nasdaq does get pleasure from formidable help across the psychologically-significant 13,000-price degree, nevertheless.
Nasdaq bulls could look to defend this space of buoyancy underpinned by month-to-date lows, the long-term ascending trendline, and backside Bollinger Band. Alternatively, reclaiming the 20-day easy shifting common might inspire a bigger rebound towards the 14,050-price degree the place all-time highs reside. I’ll finally be watching yields on ten-year Treasury bonds to assist gauge investor danger urge for food and the place Nasdaq worth motion would possibly head subsequent. Sharp rises in Treasury yields possible mirror intensifying Fed taper fears. Correspondingly, that may stand to weigh negatively on the broader inventory market and tech-heavy Nasdaq specifically.
— Written by Wealthy Dvorak, Analyst for DailyFX.com
Join with @RichDvorakFX on Twitter for real-time market perception
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