The Nasdaq 100 index initially surged to new highs at 20,371.00 but failed to sustain momentum, slipping to an intraday low of 19,906.25 before closing lower around 19,966. The session saw a reversal from earlier gains, with the index ending in negative territory.

This decline was largely driven by profit-taking and cautious investor sentiment amid mixed economic signals and heightened geopolitical tensions.

Investors, initially encouraged by subdued U.S. inflation data and hopes for Federal Reserve rate cuts, turned cautious as stronger-than-expected economic indicators, including the June MNI Chicago PMI and University of Michigan Consumer Sentiment Index, signalled robust economic health.

These reports raised concerns that the Fed might take a less accommodative stance than expected, leading some to reevaluate their bullish outlook on technology stocks in the Nasdaq 100.

US Economic Data and Fed’s Stance on Interest Rate Cuts

On the U.S. front, economic data released on Friday delivered mixed signals but generally pointed towards a stronger economic outlook.

The core PCE price index for May, which is the Federal Reserve’s preferred gauge of inflation, eased to a 2.6% year-over-year increase, meeting expectations and marking its slowest rise in three years.

This moderation in inflation was viewed as potentially supportive for anticipated Federal Reserve rate cuts later in the year. Despite the moderate inflation figures, other economic indicators such as personal spending and personal income displayed resilience.

Personal spending edged up by 0.2% month-over-month in May, while personal income saw a stronger-than-expected increase of 0.5% month-over-month. These data points underscored the perception that the U.S. economy is sustaining moderate expansion, potentially diminishing the immediate need for aggressive rate cuts.

Personal savings rate edged up in May.
Still well below prepandemic norm.
Americans aren't feeling the need to pull back spending but are barely able to make ends meet.

🇺🇸 💵 pic.twitter.com/qgSMiXNUXc

— VOLMAN (@lumiloz) June 30, 2024

Therefore, the Federal Reserve’s stance continues to be crucial for the Nasdaq 100 and broader equity markets. Traders are attentively monitoring statements from Fed policymakers and key economic indicators for insights into the timing and scale of future rate adjustments. These decisions have the potential to either bolster or dampen stock market performance.

Escalated Tensions Between Israel, Gaza, and Lebanon and Its Impact on Nasdaq 100

On the geopolitical front, the tensions in the Middle East have also put downward pressure on market sentiment, including the Nasdaq 100. It should be noted that the escalated conflicts between Israel and Hezbollah in Lebanon, coupled with ongoing violence in Gaza, have heightened regional instability.

Meanwhile, the recent reports of intensified rocket attacks and military responses have raised concerns about broader implications for global stability and energy markets.

Investors typically react negatively to geopolitical uncertainties, which can disrupt trade flows, increase oil prices, and potentially lead to broader market volatility.

For the Nasdaq 100, which includes technology and growth stocks with significant global exposure, any escalation in geopolitical tensions could undermine investor confidence and trigger risk-off sentiment.

NASDAQ 100 Price Forecast

The NASDAQ is currently trading at $19,682.87, reflecting a 0.54% decline. On the 4-hour chart timeframe, key price levels provide essential guidance for traders. The pivot point, marked by the green line, is at $19,744.

Immediate resistance is noted at $19,857, followed by $19,979 and $20,093. On the downside, immediate support is at $19,620, with subsequent levels at $19,518 and $19,410.Technical indicators show the Relative Strength Index (RSI) at 47, indicating a neutral market stance.

The 50-day Exponential Moving Average (50 EMA) stands at $19,592.In conclusion, the outlook remains bearish below $19,745. A break above this level could shift the market to a more bullish bias.