NASDAQ 100 Forecast: QQQ rises but the recovery could be short -lived

US futures

Dow future 0.2% at 39,163

S&P futures 0.32% at 5286

Nasdaq futures 0.35% at 18690

In Europe

FTSE -0.32% at 8313

Dax -0.25% at 18616

• Stocks rise, but recovery may be short-lived
• Dow, S&P500 track for weekly losses, Nasdaq 100 gains
• Worries over higher rates for longer have hurt sentiment
• Oil is set for a steep weekly decline

Fed worries could limit the upside

US stocks are pushing higher after losses in the previous session and ahead of a long weekend.

U.S. stocks ended lower yesterday after stronger-than-expected PMI data and hawkish Fed commentary caused the market to push back on rate cut expectations. Stocks fell even though Nvidia smashed forecasts.

The Dow fell 1.5%, while the S&P500 and Nasdaq closed 0.7% and 0.4% lower respectively. The Dow Jones suffered steeper losses as Nvidia’s 9% gain buffered the losses in the Nasdaq and S&P500.

Given ongoing concerns over whether the Fed will be able to start cutting interest rates in September, this raises questions about whether today's recovery will hold.

Data from the US showed that durable goods orders rose 0.8%MoM ahead of -0.8% expected, although the prior month was downwardly revised to 0.8%.

Investors will now look ahead to the release of Michigan consumer confidence, which is expected to edge higher.

Dow Jones is on track to close 2.4% lower across the week, and the S&P500 is on track to lose 0.60%, snapping a four-week winning run.

Corporate news

Nvidia is set to open 1.1% higher, adding to 9% gains on Thursday after its Q1 earnings smashed forecasts—investors after shrugging off news of intense competition in China.

Tesla is set to open 0.3% higher despite industry data showing that the EV maker is cutting output of its top-selling model Y by a double-digit percentage at its Shanghai plant.

Workday is set to open 11% lower after the human resource software provider cut its annual subscription revenue forecast.

Nasdaq 100 forecast – technical analysis.

The Nasdaq is trading within its rising channel. The price has corrected lower from the ATH of 18947 reached on Thursday before finding support on the lower band of the rising channel. However, the long upper wick of yesterday’s candle suggests that a top could be in for now. Sellers will look to take out, the lower band of the rising channel and 18466, the March high, to extend losses towards 18000. Meanwhile, buyers will look to rewards of 19000 and fresh all-time highs.

FX markets – USD falls, EUR/USD rises

The USD is falling after six straight days of gains, but it is set to book 0.5% gains across the week on expectations that the Fed could keep interest rates high for longer.

EUR/USD is rising after five days of losses but is still on track to book losses across the week. German GDP data showed that the economy grew 0.2% in Q1, in line with forecasts. Stronger-than-expected negotiated wage data yesterday is also raising questions over the ECB's ability to cut rates later in the year after a June rate cut, which is widely expected.

GBP/USD is rising as the US dollar gives up gains despite weaker-than-expected UK retail sales. Sales slumped 2.3% MoM, suggesting that households remain squeezed even as inflation is falling.

Oil set for a steep weekly decline

Oil prices are falling for a fifth straight day and are on track to lose over 4% across the week amid rising concerns over the demand outlook.

Upbeat data and hawkish commentary from Federal Reserve officials raised expectations that the Fed will leave rates high for longer, which could slow economic growth in the US, the world's largest oil consumer.

Attention now turns towards the OPEC+ meeting at the start of June, where the group will discuss whether to extend voluntary output cuts of 2.2 million barrels per day.

Following the OPEC meeting, attention will likely return to demand as the summer driving season starts in the US after Memorial Day.