The NASDAQ As Earnings Season Kicks-Off!

The NASDAQ rose on Friday despite higher-than-expected US inflation data. Analysts noted that investors took advantage of lower prices following Thursday’s 2.20% decline. Investors may still seek to increase exposure to stocks and indices, anticipating a rate cut and strong earnings data.

The Producer Price Index came in at 0.2% versus the 0.1% expectation. Investors were concerned that the Core Producer Price Index exceeded expectations by more than double. However, the good news is that the US inflation rate fell from 3.3% to 3.0%, the lowest since June 2023. Today, investors will focus on the Empire State Manufacturing Index release, which could benefit from a slightly higher reading. Additionally, the Fed Chairman’s speech at 16:00 GMT may trigger volatility depending on his comments.

While none of the earnings reports released Friday were part of the NASDAQ index, they still captured investors’ attention. JP Morgan, CitiGroup, and Wells Fargo all surpassed earnings and revenue expectations, but their stocks depreciated in the following session, with Wells Fargo falling over 6.00%. The primary cause was the cautious forward guidance from all three banks regarding economic conditions in the coming months ahead of the elections. Citi’s US consumer lending division saw profits plunge by 74% compared to last year, with CFO Mark Mason noting a general decline in consumer spending and account balances below pre-Covid levels. Additionally, JP Morgan indicated that lower-income consumers are likely to struggle over the next 3-4 months.

On the technical side, the NASDAQ is trading above the 75-Period EMA and 100-Period SMA. The RSI is also above the 50.00 level, indicating that buyers are regaining market control. Buy signals are likely to strengthen as the price crosses above the $20,471.10 and $20,552.77 levels.