Nasdaq 100 near yearly highs, capped just below 16,000 points

• Nasdaq 100 retreats slightly from the new yearly highs reached the previous day just below 16,000 points.
• Nasdaq 100 remains near the highest levels since January 2022 on expectations that the Federal Reserve has ended its rate-hiking cycle.
• Markets are convinced that the Federal Reserve has stopped raising rates, and is already considering further interest rate cuts for the first half of 2024.

The Nasdaq 100 index is moving slightly lower at the start of the American session on Thursday after reaching the highest levels since January 2022 the previous day. At the time of writing, the Nasdaq is trading at 15,810 points, losing 0.06% on the day.

Looking at the daily chart of the Nasdaq you can see strong bullish momentum over the past three weeks, since falling to a low of 14,057 on October 26. Since that time, the index has moved higher to reach a high at the 15,974 point level on Wednesday, marking a new yearly high for 2023 and reaching levels not seen since January 13, 2022.

Nasdaq 100 daily chart

The recovery from the mentioned minimum began after the US Federal Reserve (Fed) decided to leave its interest rate unchanged in the range of 5.25%-5.50%.

The momentum continued when the US nonfarm payrolls (NFP) report showed that 150,000 new jobs were added in October, below the 180,000 expected.

This weaker-than-expected data was good news for markets as it dampened expectations of a rate hike in December and sparked euphoria in the equity market.

In fact, speculation about possible Fed interest rate cuts intensified after the publication at the beginning of the week of lower-than-estimated inflation figures, which reinforced expectations that the Federal Reserve has finished raising rates. interest rates.

The United States Consumer Price Index (CPI) stood at 3.2% year-on-year in October, five tenths below the 3.7% in September, according to the Bureau of Labor Statistics. Core inflation, which excludes volatile food and energy prices, fell to 4% from 4.1% previously. This is the lowest level recorded by the indicator in 25 months, specifically since September 2021.

The US Producer Price Index (PPI) recorded its biggest drop since April 2020 and was down 0.5% in October. Additionally, September data was also revised downward to show a PPI increase of 0.4% instead of 0.5%.

Following the release of this data, market participants appear convinced that the Fed will not raise interest rates again and have been weighing the possibility of rate cuts during the first half of 2024.

At the time of writing, there is a 99.7% chance that the Fed will leave rates unchanged at its December meeting, according to the CME Group’s FedWatch tool:

Fed rate probabilities for December 2023 meeting

Furthermore, the odds of a rate cut are 35% for the March 2024 meeting and over 65% for the May meeting:

Fed rate probabilities for May 2024 meeting

In today’s US data, weekly jobless claims rose by 13,000 in the week of November 10, rising to 231,000 from 218,000 previously. This is the highest reading in unemployment claims in three months, specifically since the week of August 11. For its part, the Philadelphia Fed manufacturing index improved to -5.9 in November from the previous and expected -9. Despite the improvement, this is the third consecutive negative month for the indicator. Finally, industrial production fell 0.6% in October, worsening the 0.3% decline forecast by consensus.

The Nasdaq is currently in the July high zone (annual high) just below 16,000 points and has recovered all of its losses made during the downward movement that began in mid-July.

Nasdaq technical levels