The Nasdaq printed a fresh record high this week on a less hawkish Fed rate path and falling oil prices, but the rally reversed after stronger-than-expected US PMI data revived rate-hike bets. Rising oil prices tied to the lack of a US-Iran breakthrough are now threatening to erase the index's entire post-FOMC advance.
Fed outlook and oil swing sentiment
The Nasdaq risks erasing all the gains made since the FOMC decision as oil prices climb again and rate-hike bets build. The index had been supported into new record highs after the Fed projected a less hawkish rate path than markets had priced, showing low appetite for extended tightening.
A significant drop in oil prices, driven by growing expectations of de-escalation and an earlier end to the conflict, also kept the Nasdaq bid into new highs. At the UN General Assembly, though, Trump repeated that the US would strike a deal with Iran only after the November elections, cooling those de-escalation hopes.
Strong PMI data triggers hawkish repricing
Risk sentiment deteriorated as oil prices began rising again, dragging the Nasdaq lower. The bearish momentum then increased after US Flash PMIs showed much stronger growth than expected, triggering another hawkish repricing that sent Treasury yields to new highs.
The focus now stays on interest-rate expectations and Middle East developments. If markets sense an earlier end to the war or get a surprising breakthrough, oil prices could decline, triggering a dovish repricing that would support the Nasdaq. If tensions instead remain unchanged or re-escalate, crude oil could stay supported into new highs and weigh on stocks as rate-hike bets keep increasing.
Technical picture across timeframes
On the daily chart, the Nasdaq printed a new all-time high this week but could not extend the gains as the negative macro developments dragged prices lower. A major upward trendline still defines the bullish structure on this timeframe: buyers may lean on it to position for a rally into new highs, while sellers will look for a break lower to extend the correction toward the 27,203 level, with the swing low at 28,800 as the first target.
The four-hour chart shows a swing high near the 30,300 level that could act as support, with buyers stepping in around there to position for a rally into new highs. On the one-hour chart, a minor downward trendline defines the current bearish momentum, with sellers leaning on it to push into new lows unless buyers break higher.
Today's calendar brings the Trump-Xi meeting and US jobless claims data, but the market's focus stays on US-Iran developments and interest-rate expectations.
Source: Investinglive
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