Wall Street Soars on Strong US Activity Print
On Tuesday, Wall Street indexes experienced a notable rise, fueled by a surprising US activity print that caught market participants off guard. As the world eagerly awaits the outcome of the US Presidential election, the financial landscape remains dynamic and ever-changing.
Surprise Jump in ISM Services PMI
The ISM Services PMI in the US unexpectedly surged to 56 in October 2024, marking its highest level since August 2022. This significant increase from 54.9 in September surpassed forecasts of 53.8, driven primarily by a robust rebound in employment. The data provided a much-needed boost to Wall Street indexes, with all 11 sectors in the green.
Concerns Amidst Political Uncertainty
While the positive economic data was welcomed, concerns regarding political uncertainty loomed large. Issues such as hurricanes and labor problems at ports were cited as potential challenges, although the impact of the longshoremen’s strike was less severe than initially anticipated. Steve Miller, Chair of the ISM Services Business Survey Committee, highlighted the resilience of the economy in the face of these challenges.
Earnings Momentum and Market Rally
On the earnings front, Palantir Technologies Inc’s stock surged by 23% to reach a new high after revising its yearly revenue forecast for the third time. As the election draws nearer, Trump media continues its rally, with the group posting a notable 14.4% gain. Big tech stocks also saw positive movement, with Tesla and Nvidia both recording significant increases.
Trump or Harris: Congressional Elections Results Crucial
Amidst the intensifying election race, focus has shifted to the congressional elections, which could hold greater significance for market participants. The latest polls indicate a tight race, underscoring the importance of a unified government for driving policy changes. A divided congress may pose challenges for the incoming President, impacting economic and foreign policy decisions.
Volatility and Market Outlook
Volatility has remained subdued as market participants assess the risks ahead, including the upcoming Federal Reserve decision, BoE announcement, and University of Michigan sentiment preliminary numbers release. The market awaits these key events with cautious optimism, mindful of the potential impact on financial markets.
Technical Analysis: Nasdaq 100
The Nasdaq 100 index recently broke below an ascending channel but managed to hold steady leading up to the election. Despite market caution, US indexes have not seen significant downward pressure following last week’s selloff. The upcoming election could serve as a catalyst for further market movement, with resistance levels at 20484, 20675, and 20790 in focus.
Market Support and Resistance Levels
- Support: 20484, 20675 (all-time highs), 20790
- Resistance: 20484, 20675 (all-time highs), 20790
As market dynamics evolve in response to political and economic developments, investors must remain vigilant and adaptable to navigate the ever-changing financial landscape effectively.
Analysis: Understanding the Impact
The surge in Wall Street indexes following the strong US activity print underscores the market’s resilience in the face of uncertainty. The unexpected jump in the ISM Services PMI highlights the underlying strength of the US economy, providing a positive outlook for investors.
The upcoming US Presidential election and congressional races hold significant implications for market performance, with a unified government potentially driving policy changes. However, a divided congress could pose challenges, impacting economic policies and foreign relations.
As market participants brace for key events such as the Federal Reserve decision and earnings releases, maintaining a cautious yet optimistic approach is crucial. Understanding the technical analysis of indices like the Nasdaq 100 can provide valuable insights into potential market movements, guiding investment decisions in a volatile environment.
By staying informed, adaptive, and proactive, investors can navigate the complex financial landscape with confidence, seizing opportunities and managing risks effectively for long-term financial success.