(News Bulletin 247) – The Nasdaq Composite (+1.90% to $104.93 on Tuesday) should open this Wednesday significantly in negative territory, under the effect of the disappointments caused by the quarterly publications of two tech heavyweights: Microsoft and Alphabet. A halt in the takeover of the buying camp that had prevailed since Friday and the publication of an article by the Wall Street Journal according to which certain members of the Federal Reserve would not be against the idea of ​​slowing down the pace of its monetary tightening starting in December before halting key rate hikes at the beginning of next year. Also according to this article, the institution would be heading for a rate hike of 0.75 percentage points at its next meeting in early November.
The Fed will complete its next FOMC on Wednesday 02 November.
Is this a “harbinger of the long-awaited “dovish pivot” of the Fed?” Asks Thomas Giudici, co-head of bond management at Auris Gestion. “The FOMC members seem, in any case, still divided, the most dovish advocating for a pause in order to observe the consequences of the tightening of financial conditions. While core inflation should continue to be vigorous in the coming months at due to strong inertia on certain components (particularly rents), will the Fed take the gamble of releasing the pressure too soon after making a mistake in 2021?
In terms of statistics yesterday, the Conference Board’s consumer confidence index came out this month at 102.5, down sharply below expectations. Note this Wednesday a much larger than expected widening of the deficit, certainly structural, of the trade balance of goods in the United States: -92.2 billion dollars, for the month of September.
Shortly before the opening of Wall Street, yields on sovereign government bonds fell back towards 4%, to 4.07%.
KEY GRAPHIC ELEMENTS
Beneath a 50-day moving average (in orange) in full downward acceleration despite the outspoken reaction since October 13, the index remains in danger. The gap of October 07, which we are monitoring, was finally able to be filled, but immediately, the opening this Wednesday will probably be at its level. If the close is below, the bearish message will be reinforced.
FORECAST
Considering the key chart factors we have mentioned, our opinion is negative on the Nasdaq Composite index in the short term.
This bearish scenario is valid as long as the Nasdaq Composite index is trading below the resistance at 11250.00 points.
CHART IN DAILY DATA
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