The Latest Inflation Data Provides US Stocks A Much Needed Push!

The US Core PCE Price Index unexpectedly drops to a 4-month low providing the much-needed support for stocks.
The NASDAQ rose 0.35% in the first minutes after the latest inflation release and trade higher than previous retracements.
The lower PCE Price Index is likely to reduce the chances of a rate hike in 2024. Previously, the more hawkish FOMC representatives considered this a possibility.

USA100 – Inflation Lowers The Pressure On Hawkish Fed Members!

The NASDAQ was trading lower throughout the day’s Asian and European session as it has over the past week. However, the latest Core PCE Price index gave further confidence regarding less monetary policy pressure later in the year. The Core PCE Price Index read 0.2%, which is a 4-month low and lower than previous expectations.

The price of the index currently trades lower than the main sentiment lines including the 75-Bar EMA and 100-Bar SMA. However, the recent momentum has prompted a buy signal on smaller timeframes. As a result, technical analysis mainly indicates a correction between $18,696.80 and $18,747.05. Currently, of the NASDAQ’s 50 most influential stocks 75% are increasing in value prior to the US market open which is also a good sign.

In recent days, the stock market has also been supported by strong US economic data but has nonetheless deprecated due to interest rate risks. Preliminary data on US GDP rose by 1.3%, slightly higher than expectations. Thus, the positive trend remains, but is quite weak compared to the 3.4% shown in the previous quarter. This is due to a gradual decrease in consumer spending, exports, and government investment. At the same time, household personal income adjusted by 5.3%, and real income of the population by 1.9%, which is a sign of continued high inflation. However, today’s inflation reading has eased these fears.

Investors will now largely be monitoring next week’s employment data including the JOLTS Job Openings, Non-Farm Payroll, Average Hourly Earnings, and the Unemployment rate. Ideally, shareholders will be looking for a sign of lower inflation but a resilient employment sector. For example, a low Average Hourly Earnings, an Unemployment Rate between 3.9% and 4.00%, while the NFP comes in line with expectations.

Michalis Efthymiou

Market Analyst

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