Better US Data Bolsters Sentiment

US stocks turned higher yesterday in response to the latest set of economic data out of the US. New home sales were seeing rising at their fastest pace in over a year at 763k, up from 680k prior and well above the 677k the market was looking for. Additionally, consumer confidence was seen hitting its highest level since the start of 2022. Consumer confidence came in at 109.7, up from the prior month’s 102.5 reading and well above the 103.9 the market was looking for. Finally, durable goods were also seen higher over the month. The headline reading printed 1.7%, up from 1.2% prior and in stark contrast to the -0.8% reading the market was looking for. Core durable goods were also higher at 0.6% vs -0.3% prior and 0% expected.

Fed Outlook & Powell Comments

In all, it was a solid day of data for the US, once again serving as evidence against those warning of an imminent recession. Stocks were bolstered across the board with the Nasdaq leading the gains on an almost 2% rally. However, sentiment has softened a little today with traders now eyeing the likelihood of fresh Fed rate hikes against the backdrop of better-than-expected US data. If this narrative gathers further traction, stocks are likely to soften more as yields rise. Looking ahead today, traders will be watching Fed’s Powell who speaks at the ECB’s Sintra Forum. If Powell sticks to the hawkishness voiced in recent comments, this should act as a near-term headwind to stocks.

Technical Views

Nasdaq

The rally in the Nasdaq has stalled for now into a test of the 15177.5 level and bull channel highs. Price has corrected lower and is sitting within the upper part of the channel. Momentum studies have turned bearish here, suggesting room for a further correction lower. However, while 14288.2 holds as support, the focus remains on further upside and a break of current highs.