Market Analysis: NASDAQ Avoids The Bears Due To NVIDIA Strength

The latest news capturing investor attention is the recent Purchasing Managers Index (PMI) report, a key leading indicator. In contrast, other economic data are considered lagging as they reflect past performance rather than future sentiment. Both the ISM Manufacturing PMI and Manufacturing Prices fell short of expectations and were lower than the previous month. Analysts caution investors not to overreact, noting that this would only be significant if employment also declines. Furthermore, the Final Manufacturing PMI reading of 51.3 still signals economic expansion, and lower oil prices could support stocks in the long term.

A slight decline in the PMI is not necessarily negative for the stock market, provided there is no increased risk of a recession. Reduced consumer demand and economic activity might prompt the Federal Reserve to consider more than one rate cut in 2024. Currently, 53.0% of large traders are anticipating this, up from 49.0% before the data release. Additionally, most experts expect the regulators to cut the interest rate twice over the year, totaling 0.50%.

The situation in the bond market has stabilized somewhat, and this week there is a local downtrend: 10-year bonds are trading at a yield rate of 4.491%, down from 4.601% recorded last week, the yield of 20-year bonds was 4.711% after 4.816%, and the yield rate on 30-year bonds fell to 4.635% from 4.721% a week earlier.

However, technical analysis suggests there is still a possibility of price declines. The price failed to stay above key sentiment lines and did not form a higher high. Currently, the Relative Strength Index (RSI) is at 50.30, indicating the potential for a price reversal. In addition to this, the top 9 most influential company are witnessing their stocks decline with the largest decline coming from Broadcom (-0.75%). If this continues, traders may aim for the previous low (support level).

If the price rises to a new high breaking above $18,638.50, the momentum could indicate upward price movement again. Otherwise, bearish crossovers on the 5-minute chart will continue to indicate valid downward momentum. Currently, European stocks are declining and if they keep falling, investors can use this as an indication of a risk-off sentiment.