(News Bulletin 247) – While the yields of Treasuries 10 years are heating up again, in reaction to the firm tone of the main central banks of the planet this week, the growth files are particularly penalized, mechanically weighing down the Nasdaq Composite. The flagship index of technology stocks on the American side lost 3.23% yesterday to 10,810 points, on its monthly lows.
As a reminder on Wednesday, the firmness of the tone used by the Fed, at the close of the last FOMC of the year, will have surprised a large fringe of investors who were expecting more flexibility, in particular in reaction to the recent publication of a marked slowdown in inflation, as defined by November CPIs.
J. Powell, who spoke at a press conference after the FOMC, brushed aside hopes of a pause in the rate hike process in early 2023, an option described as “premature”. No surprise, however, in terms of the extent of the rise in Fed Funds, inflated by 50 bps to reach 4.50%.
Fed members raised their rate projections to 5.1% for 2023 and 4.1% for 2024 from 4.6% and 3.9%, respectively, at their September meeting. They also anticipate higher inflation, at 3.1% for 2023, against 2.8% previously, and at 3.5% for “core” inflation, i.e. excluding the price of energy. energy and food, against 3.1% in September.
“The Fed will not be reassured about inflation as long as wages grow at a sustained pace”, analyzes Julien-Pierre Nouen (Lazard Frères Gestion). “The latest figures show no slowing trend so far. The decline in inflation may therefore be insufficient for the Fed, which wants to ensure a return to the 2.0% target.”
To be followed at 3:45 p.m., the services and manufacturing PMIs in 1st estimates for the current month. Yesterday, operators had to deal with major US macroeconomic indicators showing, on the whole, negative signals (retail sales, Philly Fed, Empire State Index), in a job market whose signs of tension persist (registrations unemployment benefits).
KEY GRAPHIC ELEMENTS
In just three sessions this week, the U.S. stock index’s flagship tech index not only retraced the full range of a consolidation flag, but broke its base, in significant volume conditions. At this stage, we have the risk, not yet ruled out, of the formation of an isolation gap (crossing), part of which would be common with the bullish gap of November 10th. If necessary, this exclusion of the sessions from November 10 to December 15 would send a negative technical signal.
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 10960.00 points.
CHART IN DAILY DATA
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