Nasdaq Modest Gains Amid Mixed Data and Rising Optimism

l’altro ieri

Nasdaq Modest Gains Amid Mixed Data and Rising Optimism

The market’s performance reflects ongoing digestion of mixed US economic data, supportive seasonality, and cautious optimism among investors.

US Economic Data Highlights

Recent economic data provided a mixed picture of the US economy, driving market fluctuations:

- **Chicago Fed National Activity Index (Oct):** Fell to -0.40, below the expected -0.2.
- **Dallas Fed Manufacturing Index (Nov):** Came in at -2.7, worse than the forecast of -2.4.
- **New Home Sales (Oct):** Declined to 0.61M, significantly missing expectations of 0.73M.
- **Richmond Fed Manufacturing Index (Nov):** Plunged to -14, below the forecast of -10.
- **Durable Goods Orders (Oct):** Increased by just 0.2%, underperforming the 0.5% forecast.
- **Initial Jobless Claims (Nov 23):** Reported at 213K, slightly better than expected (216K), but still pointing to a resilient labor market.
- **Chicago PMI (Nov):** Dropped to 40.2, well below the anticipated 44, highlighting weakness in manufacturing.

Market Sentiment and Seasonality

Seasonality continues to work in favor of the Nasdaq, as historical trends during this time of year often support equities. The **Fear & Greed Index**, currently at **66 points**, indicates moderate optimism and a "Greed" sentiment, encouraging risk-on behavior among investors.



Rate Cut Expectations

Markets remain focused on the Federal Reserve’s upcoming meeting on **December 18th**, with a **62,2%% probability** currently priced in for a **25 basis-point rate cut**. Such a move could provide additional support for equities by easing financial conditions, though its long-term impact remains uncertain.


Geopolitical Risks

Despite today’s recovery, geopolitical risks linger in the background. The ongoing war in Ukraine remains a significant concern, with potential implications for global energy prices, supply chains, and economic stability.

Long-Term Trend Intact, but Volatility May Persist

The Nasdaq’s long-term upward trend remains intact, supported by strong fundamentals, favorable seasonality, and investor optimism. However, the current environment of mixed economic data and rising policy uncertainty suggests that short-term volatility may persist.

Broader Context

Recent data highlights a steady but moderating US economy, while forward-looking risks remain:

- **Global Economic Outlook:** The S&P Global forecast projects global GDP growth of approximately 3% by 2025, with US growth slowing to below 2% next year and China toward 4%.
- **US Policy Risks:** Potential policy changes under the new administration could elevate inflation pressures and tighten financial conditions, introducing further uncertainty for equity markets.

Implications for Nasdaq

Supportive seasonality and the potential for a December rate cut may provide short-term stability. However, investors should remain cautious as geopolitical risks and economic uncertainties could lead to continued market volatility.

What’s your outlook for the Nasdaq after today’s recovery? Can the index build on these gains, or will headwinds from economic data and global risks limit its upside? Share your thoughts in the comments!