The Nasdaq 100 index futures are loitering near their highest levels this year ahead of an important week for the market. The index jumped to a high of $13,000, where it has been in the past few days. This price is ~22% above the lowest level this year, meaning that it has moved to a bull market. The S&P 500 and Dow Jones are also rising.
Inflation and bank earnings
This will be a crucial week for the financial market because of the upcoming US inflation data scheduled for Wednesday. These will be important numbers because the Federal Reserve has vowed to be data-dependent when making its future interest rates.
When the Fed talks of being data-dependent, it is mostly talking about jobs and inflation, which form part of its dual mandate. Jobs numbers published last week showed that the American economy was doing well as it added over 236k jobs in March. The unemployment rate dropped to 3.5%, close to its lowest level since the 1950s.
Economists believe that inflation remained high in March. The median estimate is that the headline Consumer Price Index (CPI) figure dropped from 6.0% to 5.2%. Core inflation, which excludes the volatile food and energy prices, is expected to come in at 5.9%.
Futures data show that analysts expect that the Federal Reserve will hike interest rates by 0.25% in the next meeting in May. Like the Reserve Bank of Australia, the Fed could point to a strategic pause, which will be positive for the Nasdaq 100 index.
The other important catalyst for the Nasdaq 100 index will be the upcoming bank earnings season. Large American banks like JP Morgan, Citigroup, and Wells Fargo will publish their latest results on Friday. While the Nasdaq index is made up of tech companies, banking results will set the tone for the markets.
Nasdaq 100 index forecast
Nasdaq 100 chart by TradingView
The daily chart shows that the Nasdaq 100 index has been in a strong bullish trend in the past few weeks. Along the way, the index has moved above the 50-day moving average and the crucial resistance point at $12,870, the highest point on February 2. The Relative Strength Index (RSI) has moved close to the overbought level.
Therefore, the index will likely continue rising as buyers target the next key resistance point at $13,709. A drop below the support at $12,800 will invalidate the bullish view.
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