NASDAQ Market Analysis: Today’s CPI Reading

The NASDAQ increased in value for a fourth consecutive day as investors anticipate a rate cut in September. On Wednesday, the index rose by 1.05%, but the continuation of this bullish trend will hinge on today’s inflation reading. Investors are expecting a decrease in inflation; however, if this expectation is not met, it could exert downward pressure. Conversely, if inflation drops to 3.1% or lower, shareholders are less likely to sell shares ahead of earnings season, potentially sustaining the bullish trend.

The prospect of a rate cut in September has gained traction due to rising unemployment and a shift in the Federal Reserve’s tone. Earlier this week, the Fed Chairman noted signs of weakening in the employment sector, while yesterday, the Fed Governor indicated that inflation would reach the target without a significant further increase in the unemployment rate. Lower interest rates support the economy but also make bonds and the US Dollar less attractive.

Only 25% of the NASDAQ’s 100 stocks declined on Wednesday, applying minimal pressure. The bullish movement was driven largely by the top 8 most influential stocks, which all rose in value, comprising 49.08% of the entire index. The only stocks applying minor pressure were Netflix, which fell by 1.18%, and Intuit, down by 2.70%. These two stocks hold a combined weight of 3.08%.

One of the significant supporters of the NASDAQ in 2023 and 2024 has been NVIDIA. Leading analysts note that the company’s quarterly report is scheduled slightly later than its main competitors, potentially providing an advantage and an opportunity to improve performance. KeyBanc Capital Markets raised NVIDIA’s target price from $130 to $180, citing higher-than-expected demand for GB200 graphics processors, especially the more expensive NVL72 configuration, which is gaining interest over the previously popular NVL36. Wolfe Research LLC also adjusted its price target from $125 to $150.

Currently, the price is trading within a symmetrical triangle, indicating a lower high but a higher low. Volatility is likely to remain minimal until the US Consumer Price Index (CPI) release. If the CPI meets expectations and the price increases, traders should be cautious of potential profit-taking and price retracement. In the medium to long term, the price remains above the 75-Period EMA and 100-Period SMA, indicating that buyers are controlling the market. Based on price action, buy signals are likely to materialize again if the price rises above $20,697.40.