{"id":86200,"date":"2024-06-19T11:43:05","date_gmt":"2024-06-19T08:43:05","guid":{"rendered":"https:\/\/ironfx-com-php8.wp-dev.int.theitops.net\/?p=86200"},"modified":"2024-06-25T14:53:46","modified_gmt":"2024-06-25T11:53:46","slug":"equities-report-us-stock-markets-ripe-for-a-correction-lower","status":"publish","type":"post","link":"https:\/\/www.smartchinaeducation.com\/fr\/equities-report-us-stock-markets-ripe-for-a-correction-lower\/","title":{"rendered":"Equities report: US stock markets ripe for a correction lower?"},"content":{"rendered":"

US stock markets seem to have edged higher since our last report as S&P 500 and Nasdaq edged higher, reaching new record highs. Yet Dow Jones diverges maintaining a sideways motion. In this report, we are to discuss some fundamental issues and finish off the report with a technical analysis of S&P 500 daily chart. We also note that today, US markets are to remain closed for the Juneteenth federal holiday.<\/p>\n\n\n\n

The Fed\u2019s stance<\/h2>\n\n\n\n

Since our last report, we note that we had the release of the Fed\u2019s interest rate decision. The bank as expected remained on hold displaying a data dependency in its accompanying statement, yet the new dot plot in the bank\u2019s economic projections moved higher, implying that Fed policymakers are prepared to keep rates high for longer clipping the gains of US stock markets for the day. Yet in his press conference, Fed Chairman Powell stressed once again the bank\u2019s data dependency. Nevertheless the market still tends to price in the bank to cut rates twice this year, once in September and once in December. Yet even after the Fed\u2019s interest rate decision, Fed officials seem to be advising patience regarding any rate cuts. It\u2019s characteristic that Philadelphia Fed President Harker highlighted that he would be satisfied with only one rate cut this year, while others mentioned that more data about inflation are required before the bank starts cutting rates. Overall, despite the bank\u2019s policymakers accepting the scenario of starting to cut rates this year, they also seem to show some hesitation. Should we see Fed policymakers contradicting market expectations by highlighting the scenario of one rate cut only, we may see the market mood turning more cautious which in turn could weigh on US Stock markets.<\/p>\n\n\n\n

AI frenzy catapults NVIDIA to first position<\/h2>\n\n\n\n

US stock markets are dominated by an AI frenzy which is pushing the tech sector higher. It should be noted that the tech rally and the markets\u2019 focus on AI catapulted Nvidia in becoming the world\u2019s most valuable company, over mega-cap tech peers such as Microsoft and Apple. Nvidia\u2019s share price rose 3.5% yesterday, putting its market value at around $3.3 trillion. It should be noted that NVIDIA proceeded with a 1-10 stock split last week. Despite the stock split as such not adding any value on NVIDIA\u2019s share price, it does make the share more attractive and could boost demand. Yet we still view the market\u2019s AI frenzy as the main factor behind the demand for NVIDIA\u2019s share price. The company is considered by markets as maybe the main beneficiary of the AI development, given that it produces chips that are in high demand and support with computing power Artificial Intelligence.<\/p>\n\n\n\n

Has the market reached too far?<\/h2>\n\n\n\n

Yet it\u2019s not only NVIDIA that is gaining from the market\u2019s focus on AI. Other companies such as Microsoft which is also considered an early AI adopter and is winning ground as it partners with OpenAI, which created ChatGPT. The market\u2019s optimism about the prospects of AI and the possibilities it may unlock, are wide. It\u2019s characteristic that the AI-fueled rally pushed the S&P 500 to the 5,500 psychological threshold, after multiple all-time highs during the first half of the year, while NASDAQ also has a similar course, breaking one all-time high after the other. It remains questionable whether the market\u2019s rally is fundamentally sustainable given also the hesitance of Fed policymakers to proceed with substantial rate cuts within the year and the dependency of tech companies to leveraged funding. Hence we tend to issue a word of caution, for a possible correction lower, as US stock markets may be nearing if not already in a bubble.<\/p>\n\n\n\n

Analyser la technique<\/h2>\n\n\n\n

US500 Daily Chart<\/h2>\n\n\n\n
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