Market Analysis: NASDAQ & Producer Inflation

US inflation data confirms the recent spike in inflation may have passed its peak and is now declining.
Producer inflation reads significantly lower. Producer inflation excluding food and energy products also falls to recent lows.
US Producer Inflation falls to 2.2% and Core Producer Inflation to 2.3%.
The NASDAQ renews its recent highs for a second consecutive day. The index rises 0.40% after the US releases their producer inflation data.


The NASDAQ saw a weaker retracement compared to the SNP500 and Dow Jones during yesterday’s bullish trend which shows investor faith in the technology market. Most analysts and institutions have raised their target price and the intrinsic value of stocks due to the inflation data.

Consumer inflation has fallen to 3.4% and now producer inflation has fallen to an all-time low. Producer Inflation fell to 2.2% and Core Producer Inflation to 2.3%. Due to the lower inflation reading, more than 60% of traders believe the Federal Reserve will cut in September 2024. Previously, this figure was less than 37%. The lower inflation and the higher possibility of a rate adjustment is known to be positive for the NASDAQ.

However, investors are also partially reacting negatively to the Unemployment Claims which continue to read higher than the first quarter’s average. The Weekly Unemployment Claims rose to a 10-month high.

The maximum volume of government bonds, upon repayment of which the US Federal Reserve will not reinvest funds, will now amount to $25 billion per month, which is significantly less than the $60 billion previously, and the similar limit for mortgage-backed securities was maintained at $35 billion. So, the buyback program now looks like 25/35, which indicates a slight tightening within the framework of the current monetary policy to put even more pressure on inflation.

The 10-Year US Bond Yields have fallen by 0.026 points which also supports the stock market. However, investors will monitor the individual performance of the most influential stocks once the US market opens. These include Apple, Microsoft, NVIDIA, Alphabet and Amazon.

Technical analysis continues to point towards the price being controlled by buyers. In addition to this, the price is forming a bullish crossover and remains above price sentiment indicators. The VIX is trading 0.84% lower and the High Low Index is rising which points towards a “risk-on” appetite. According to Fibonacci, buy signals will strengthen with the price crossing above the $19,661.76 level.

Market Analyst

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