The Nasdaq 100 index wavered today as the market reacted to several important news, including an eagerly awaited speech by Jerome Powell. Another big news was the simmering tensions between the United States and China.
Nasdaq 100 reacts to Powell speech
The Nasdaq pared some of its earlier gains in premarket trading as the market reacted to a speech by Jerome Powell. In the speech, he said that the economy was likely facing an extended period of weak growth. He said:
“While the economic response has been both timely and appropriately large, it may not be the final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks.”
He also quashed the idea of negative interest rates but committed to do more to support the economy.
The speech came a day after Dr. Anthony Faucci cautioned states against reopening the economy. In a statement to congress, he said that doing so would lead to preventable death. This implies that the country would remain closed for a longer period than expected.
More stimulus
The Nasdaq 100 index also reacted to the new stimulus bill being passed around in congress. According to Nancy Pelosi and Chuck Schumer, they will table a motion requesting more than $3 trillion. These funds will go directly to people through checks and to companies. Most importantly, a substantial amount of these funds will go to states to help them rebuild. Some prominent Republicans have rejected the bill, citing the national debt.
In addition, the Nasdaq 100 reacted to the simmering trade war between the US and China. This is after Donald Trump ordered US government main pension fund from investing in Chinese equities. In a response, China said that the order would only hurt the US.
Notable companies in the Nasdaq were Tesla, whose stock rose by 0.54%, Intel, which dropped by 40 basis points, and Microsoft, whose stock fell by 50 basis points.
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Nasdaq 100 technical outlook
On the daily chart, the Nasdaq index has made a V-shaped recovery since March. The index is now trading at $9083, which is along the 78.6% Fibonacci retracement level. It has also formed a bearish engulfing pattern. Therefore, another decline today would mean that bears are gaining more control, which would see it test the $8,575, which is at the confluence of the 50-day and 100-day EMA and the 61.8% retracement level.
On the flip side, a close above the yesterday’s high of $9543 would mean that there are still buyers in the market who would be keen to push it to $9500.
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