Nasdaq 100 Forecast: QQQ steadies after jobless claims, Fed speak

US futures

Dow future -0.02% at 39882

S&P futures -0.01% at 5308

Nasdaq futures -0.04% at 18586

In Europe

FTSE 0.26% at 8444

Dax -0.52% at 18771

• US Jobless claims were 222k vs 232k previously
• NY Fed President Williams said more evidence of inflation cooling is needed
• Fed rate cut expectations have been brought forward
• Walmart beats revenue and earnings estimates
• Oil holds steady after yesterday's gains

CPI data is a step in the right direction but not there yet

The rally in stocks pauses for breath after a mid-tier data drop from the US and with fed speakers in focus.

After rising to a record high in the previous session, stocks are paring gains as investors digest US jobless claims, home construction data, and the May Philly Fed index.

Jobless claims were slightly higher than expected, at 222K, down from 232K in the previous week but ahead of forecasts of 220 K. The falling claims came after a significant increase in New York claims in the previous week. Meanwhile, home construction rebounded, and the Philly Fed index was weaker than expected, painting a mixed picture for the US economy.

The data comes after yesterday's US inflation figures and retail sales data were weaker than expected, adding to expectations that the Federal Reserve could start cutting interest rates this year.

However, New York Fed president John Williams calmed rate cut expectations. He said the latest US inflation data confirms price pressures are gradually easing but reiterated the need for more evidence that inflation would reach the 2% target before considering cutting interest rates.

Meanwhile, Jamie Diamon said he still sees significant pressures within the US economy, which could keep interest rates high for longer.

Sticky inflation across the first quarter and a resilient U.S. economy had raised some doubts over whether the US central bank would be able to hike rates this year. However, yesterday's data was cooler than expected, so the market reassessed rate-cut expectations.

According to the CME Fed Watch, the markets are pricing in a 75% probability that the Fed would have cut rates by at least 25 basis points in the September meeting. The markets are also pricing in full 25 basis point rate cuts before the end of the year.

The reality is the data was a move in the right direction, but the inflation reading is still a significant distance from the Fed's 2% target.

Corporate news

After beating earnings and revenue forecasts, Walmart points to a stronger open up by 5%. The retailer posted EPS of $0.60, ahead of the $0.51 forecast, on revenue of $161.5 billion, ahead of the $159.45 billion expected.

Cisco is set to open 2.5% higher after the communications equipment maker posted stronger-than-expected quarterly earnings. EPS was $0.88 versus $0.82 cents expected. Meanwhile, revenue came in at $12.7 billion ahead of $12.53 billion expected, although this marks the steepest revenue drop in 15 years.

 GameStop and AMC Entertainment are set to open lower after posting double-digit losses yesterday, as the buying behind meme stocks ran out of momentum.

Nasdaq 100 forecast – technical analysis.

The Nasdaq100 has risen above 18466, reaching fresh ATHs at 18645. Buyers, supported by the RSI above 50 supports further gains towards 19000. Meanwhile, immediate support can be seen at 18466. Below here, 18000 comes into play, the 50 SMA. A break below here could negate the near term uptrend and bring 17800 into focus.

FX markets – USD falls, GBP/USD rises

The USD is rising after falling to a two-month low yesterday following the weak CPI data. Yesterday’s selloff looks overdone. The Fed will still need to see inflation cool further to cut rates.

USD/JPY is holding steady after falling sharply in the previous session following the cooler US CPI data. Weaker-than-expected Japanese GDP, which fell 0.5% QoQ in Q1, raises questions about the Bank of Japan's ability to hike rates again, keeping the yen under pressure.

GBP/USD is falling, giving back some of yesterday's gains. The price is edging down from a high of almost 1.27 to its current level of 1.2650 amid a quiet UK economic calendar.

Oil holds steady after yesterday’s gains.

Oil prices are holding steady amid signs of more robust demand in the US and as inflation cools.

According to the latest EIA data, US crude oil, gasoline, and distillate inventories fell, signaling a rise in refining activity and fuel demand. Oil inventories dropped by 2.5 million barrels, significantly more than the 543,000 fall that was expected.

Meanwhile, cooler-than-expected US inflation has boosted expectations of a September rate cut, lowering the dollar and making oil more affordable for holders of other currencies.

However, the upside could be limited following the IEA's downward revision of oil demand forecasts made earlier in the week. The agency lowered its demand outlook by 140,000 barrels per day.