Nasdaq 100 Outlook:
- The Nasdaq 100 will likely enjoy a strong tailwind to start Wednesday trading after Apple beat expectations
- Similarly, the Dow Jones will look to earnings from Boeing, McDonalds and Dow Chemicals on Wednesday morning for influence
- That being said, Wednesday’s FOMC meeting has the potential to keep early volatility contained
Nasdaq 100 Forecast: Apple Beat to Bolster Tech Sentiment Ahead of Fed
The Nasdaq 100 will look to start Wednesday trading with a boost from its largest component, Apple. The Cupertino, California-based technology company reported robust quarterly earnings that were able to satisfy the incredibly lofty expectations held by the market after share prices climbed more than 100% from early 2019. With a strong showing from first of the major tech stocks to report this week, the Nasdaq finds itself in a strong position ahead of earnings from Microsoft, Facebook and Amazon due later this week.
Nasdaq 100 Price Chart: 4 – Hour Time Frame (November 2019 – January 2020)
To be sure, the Nasdaq’s FAANG group – which was recently exchanged for FAAMG among some analysts – has been responsible for much of the equity growth witnessed in the United States during the decade-long bull run. Recent uncertainty regarding the impact of trade wars, slowing global growth and expanding price-to-earnings ratios alongside the Fed’s ever-expanding balance sheet has worked to undermine tech sentiment as some investors have speculated the growth is largely beholden to the central bank.
Dow Jones, DAX 30 & FTSE 100 Technical Forecasts for the Week Ahead
While discussion around the proper valuation of these tech companies will likely persist, Apple’s influence on sentiment in the sector will be hard to ignore and that could help drive prices higher regardless. In pursuit of a continuation higher, the performances of Microsoft and Facebook on Wednesday afternoon, followed by Amazon on Thursday afternoon, will be critical. If the other tech-leaders disappoint, the group could see a wider divergence in share prices which would muddy the bullish case for the tech-heavy Nasdaq 100.
The Dow Jones, Economic Growth and Trade Wars
While the Nasdaq has its hands full with quarterly reports, the Dow Jones will look to earnings from some of its largest components. Starting on Wednesday morning, Boeing, McDonalds and Dow Chemicals are slated to reported. They are followed later in the week by Coca Cola, Visa and Caterpillar on Thursday morning, Thursday afternoon and Friday morning respectively. Follow @PeterHanksFX on Twitter for earnings insights and analysis.
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It is safe to assume the technology leaders will experience greater volatility, but the blue-chip index will require a solid performance from each of its members nonetheless. In turn, they may provide greater insight on developing trends in both the service and manufacturing sectors in the United States alongside any lingering effects of the US-China trade war.
The Nasdaq 100 and the Federal Reserve
That being said, the quarterly reports may pale in comparison to the influence of the Federal Reserve which is set to decide its interest rate range Wednesday afternoon. While no change to the Federal Funds Rate is expected, the status of the Fed’s repo market operations has taken center stage in its place. The impact on the US Dollar may be more acute, but it would be incredibly presumptuous to suggest the Nasdaq 100, Dow Jones and S&P 500 would ignore a hawkish Federal Reserve.
( 18:01 GMT )
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–Written by Peter Hanks, Junior Analyst for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX
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