Big technology stocks lead US stock market sentiment reversal
On Monday (January 8), big technology stocks led the reversal of US stock market sentiment, pushing U.S. stocks higher at the beginning of the week. This positive start sets the stage for key inflation data and big bank earnings reports.
The Nasdaq 100 outperformed, with Nvidia Corp leading the surge after announcing new products to attract consumers with artificial intelligence computers. Boeing’s stock price plummeted as authorities temporarily grounded its 737 Max 9 aircraft. At the same time, U.S. Treasury yields fell along with the dollar.
However, stocks fell the most since October amid mixed U.S. economic data, as bets on the Federal Reserve cutting interest rates dwindled.
Robert Teeter, managing director at Silvercrest Asset Management, commented, “The valuation-led year-end rally pulling potential gains from 2024 to 2023 makes forecasting this year tricky, especially as data becomes more complex and futures markets Showing that a rate cut by the Fed has been taken into consideration.”
To further complicate the situation, inflation expectations released by the New York Fed showed substantial declines in expected inflation over the next one, three, and five years, something the Fed should take comfort in.
On the foreign exchange front, there were fluctuations in the pound, euro, and USD/CAD as traders reacted to lower oil prices and dollar weakness. Fed Governor Bowman and Atlanta Fed President Bostic both addressed falling inflation and the potential for rate cuts.
Looking ahead, this week traders will focus on key U.S. data releases such as the U.S. consumer price index for December on Thursday, and the producer price index on Friday. These numbers should provide insight into the Fed’s efforts to lower inflation to its 2% target.
Furthermore, Tuesday’s trading day is expected to focus on key economic indicators from Switzerland, Germany, France, and the US. These include unemployment rates, industrial output, trade accounts, and small business confidence index, which will play a key role in shaping market sentiment.
In terms of currency trends, the EUR/USD, GBP/USD, and USD/JPY all saw movement, but with varying technical support and resistance levels. These trends will be closely watched in the coming days.
Overall, the focus on large technology stocks, inflation data, and major bank earnings will continue to dominate market sentiment, as traders look for clues regarding the Fed’s possible interest rate decisions.