The Nasdaq could stay close to current levels while waiting for the Fed
Wall Street ended slightly higher yesterday, after a black session the day before. August’s PPI report was better than the CPI report released the day before, which eased pressure on the bond market and boosted equity market buying, but disproportionately.
Indeed, although US indices regained some height yesterday, rising values outpaced falling values by an 11-to-10 ratio on the NYSE, while falling values outpaced rising values in the same proportion on the NASDAQ. Sector performance in the S&P 500 also reflected the mixed market, with around half of the 11 sectors closing in positive territory.
Investors should generally remain cautious pending the next Fed meeting next week after which the FOMC is expected to raise rates again by 75 basis points. The most important will not be so much the rise in rates, but the new projections of the FOMC, in particular their new estimate of the neutral rate, because it is the long-term rate targeted by the central bank. The more this rate is revised upwards, the more this should put pressure on financial assets.
While waiting for the Fed next Wednesday, investors will closely watch the Philadelphia and New York Fed regional manufacturing indices, retail sales and industrial production released this afternoon, and then housing sales released on Monday.
Nasdaq 100 daily price chart – key levels