Stocks Under Pressure
Sentiment in US stocks has turned bearish again as we head into the weekend. The rally in the Nasdaq stalled into the 20k mark with the index now turning lower on the back of some unsettling developments at the March FOMC. A downward revision to US growth forecasts and upward revision to unemployment and inflation forecasts has spooked investors.
Economic Uncertainty
The Fed was seen taking a more cautious tone over economic risks linked to Trump trade tariffs, including a larger-than-expected spike in inflation this year, which has fuelled uncertainty over the likelihood of near-term easing. The market is still pricing in a cut in June for now. However, if we start to see CPI ramp up in the coming readings this could well change.
Inflation Risks
While the Fed lowered its dot plot forecasts, now projecting two cuts this year down from one prior, the reaction in markets suggests that traders are more focused on upside inflation risks and the prospect that higher CPI derails Fed easing expectations. The impact of Trump’s tariffs are yet to be felt in the economy and with risks that US inflation moves faster than the Fed expects, particularly if the trade war escalates further, USD is vulnerable to a strong push higher which could see stock prices tumbling much lower near-term.
Technical Views
Nasdaq
The Nasdaq is still sitting above the 19,723 level for now which bulls need to maintain to keep focus on a fresh push higher. If the market slips back below this level, risks of a deeper push towards the 18,686.50 level, in line with fading momentum studies readings.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.