Wall Street: US markets surge with fourth consecutive weekly gains and inflation focus
US equity markets rally, Core PCE insights awaited. Investors brace impact.
In a holiday-shortened week, US equity markets locked in a fourth week of gains. The Dow Jones added 442 points (+1.27%), the S&P 500 gained 1%, and the Nasdaq gained 0.91% for the week. Wall Street’s measure of fear, the VIX, closed at 12.45%, its lowest close since January 2020.
In economic news, the not-too-hot, not-too-cold run of data continued Friday night as the US Composite Flash PMI for November printed unchanged at 50.7. Within the details, the Manufacturing PMI surprised to the downside at 49.4 vs 49.8 that was expected, while the Services PMI at 50.8 was stronger than the 50.4 expected.
In light of recent rapid market activity, a slight pullback in US equity indices would not be unexpected. Timing-wise, the end of this month, into early December, looks to be a possible window for a pullback to rebuild energy and to set up for the end-of-year finale.
This week's key economic data
This week, a pivotal economic event in the US is the unveiling of the Fed's favoured inflation metric, Core PCE, scheduled for Friday morning, which may influence the expected timing of the Fed's first “adjustment” cut.
What is expected from Friday's Core PCE inflation data?
The consensus expectation is for Core PCE to increase by 0.2% in October, which would see the annual rate ease to 3.5% from 3.7%, the lowest rate since April 2021.
Headline PCE is expected to rise by 0.1% in October, allowing the annual rate to moderate to 3.1% from 3.4%, on track to fall to 2.5% in the months ahead.
S&P 500 technical analysis
Last week, the rally from the October 4122 low, traded to a high of 4580.50, a gain of over 11% in just 18 trading sessions. Although we remain bullish into year end, we would not contemplate opening fresh longs at these elevated levels.
Instead, we would prefer to use dips back towards support at 4450/30 in anticipation of a retest and break of the July 4634.50 high. Above here is blue sky towards the November 2021, 4740.50 high, followed by the January 2022, 4808 high.
Aware that a sustained break below the support of the 200-day moving average at 4300 would warn that the rally has run its course and that a deeper pullback is underway.
S&P 500 daily chart
Nasdaq technical analysis
Last week, the rally from the October 14,140 low traded to a fresh cycle high of 16,173, a gain of over 14% in just 19 trading sessions. A move in line with our expectations - however, the “easy money” in the Nasdaq has now been taken off the table.
Although we remain bullish into year end, we would not contemplate opening fresh longs at these elevated levels. Instead, we would prefer to use dips back towards support at 15,700/450 in anticipation of a push towards 16,400/500 in the weeks ahead.
Aware that should the Nasdaq see a sustained break of support at 15,450, it would warn that the rally has run its course and that a deeper pullback is underway towards the 200-day moving average at 14,400.
Nasdaq daily chart
- Source Tradingview. The figures stated are as of 27 November 2023. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Start trading forex today
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets