A more aggressive-than-expected rate cut by the Federal Reserve and robust economic data have propelled Wall Street to new highs
The first hour of the cash session on Wall Street has seen a very positive mood. The S&P 500 has climbed to new all-time highs, while the Nasdaq 100 is now close to the 20,000-point mark. When considering futures contracts, it’s important to remember yesterday’s roll-over, but even without this factor, the US500 would be at record levels and the US100 would be at its highest since the second half of August, undoubtedly attempting to break through the resistance associated with these peaks.
The reason for the surge is clear: the Fed has slashed interest rates by 50 basis points, more than anticipated, and has almost declared victory over inflation. The central bank indicates that the economy is in very good shape and that the sharp decline in inflation guarantees further significant rate cuts. This is precisely what the cooled economy needs: lower interest rates. It’s also worth noting that with lower interest rates, the valuations of some companies, especially technology firms that have undergone substantial corrections in recent weeks, may appear attractive.
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Open account Try demo Download mobile app Download mobile appToday, we also received data on initial jobless claims. The figure came in at 219,000, significantly below the previous reading of 230,000. It’s also worth mentioning that historically, a recessionary signal has appeared when claims have exceeded 300,000. So we are still very far from this point.
US500
The roll-over was approximately 50 points. Even without the roll, the US500 would be at new all-time highs. Yesterday we saw profit-taking after the Fed conference, but today we’re seeing a continuation of the strong rebound that began on September 9th. The key support zone remains around 5,670-5,700 points. Resistance levels include 5,805 at the 113.0 Fibonacci retracement and 5,900 at the 127.2 Fibonacci retracement. At this level, we’ll also find the range of the previous upward wave.
US100
The Nasdaq 100 roll-over was approximately 250 points. Without this factor, the contract would have tested the highs from August 22nd. We are currently observing a breakout above 20,000 points. Gains, excluding the roll, are around 2.5%. The key support zone extends from the 61.8% to 78.6% Fibonacci retracement of the last downward wave. Resistance levels include 2,500 at the 127.2 Fibonacci retracement and the recent all-time highs at 20,900 points.
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