STOCK MARKET FORECAST: NASDAQ 100 STRUGGLING DESPITE BIG BEAT ON CONSUMER CONFIDENCE DATA
The Nasdaq 100 is trading on its back foot so far this morning as major stock indices drop following the New York opening bell. Stock market selling pressure has been relatively modest, however, with the Nasdaq down about -1% at session lows. It appears that stocks are drifting lower as Treasury yields spike higher with ten-year Treasuries popping above 175-basis points. Investor fear lingering around potential spillover from the Archegos Capital blowout, in addition to month-end and quarter-end rebalancing, are forces likely weighing on Nasdaq price action as well.
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Markets are now digesting the latest round of US consumer confidence data, too. The monthly consumer confidence index just released showed a huge improvement during the month of March. Headline consumer confidence crossed the wires at 109.7, which topped the market forecast of 96.9 and is up from 90.4 reported last month. This increase in consumer confidence boosted the index to its highest level since the onset of the covid pandemic in March 2020.
CONFERENCE BOARD CONSUMER CONFIDENCE INDEX – MARCH 2021
Chart Source: DailyFX Economic Calendar
The better-than-expected US consumer confidence report comes as little surprise, however, when considering Euro-area economic sentiment beat economist estimates earlier in the session. Strong US consumer confidence could follow a successful vaccine rollout coupled with stimulus checks hitting the financial system. US consumer confidence data brightened for both subcomponents with the present situation index and future expectations index rising to 110.0 and 109.6, respectively. The US consumer confidence survey also noted increases for the percentage of consumers claiming business conditions are “good” and for the percentage of consumers saying jobs are “plentiful.” Robust consumer confidence corresponded with a boost to purchasing intentions as well. The initial reaction by the Nasdaq was fairly muted, but solid consumer confidence likely stands to keep propelling the US economic engine and keep the stock market afloat more broadly.
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NDX – NASDAQ 100 PRICE CHART: DAILY TIME FRAME (22 OCT 2020 TO 30 MAR 2021)
Although, the Nasdaq has faced considerable headwinds over the last few weeks and currently trades about -7.5% below its record high. The tech-heavy stock market benchmark appears to be searching for technical support around the 38.2% Fibonacci retracement level of its bullish leg from 02 November to 16 February. Failure to hold this potential area of buoyancy could bring the ascending trendline into focus. A rebound attempt could face resistance from the negatively-sloped 50-day simple moving average, but eclipsing the 17 March swing high could open up the door for Nasdaq bulls to set their sights back on record highs.
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