Market Endures Precipitous Fall But Recovers Aggressively

Market Endures Precipitous Fall But Recovers Aggressively

Nvidia’s (NVDA) positive earnings report resulted in a surge in the technology sector after the market’s close on Wednesday, which continued to propel the Nasdaq upward throughout the night and into the cash session’s opening. The Initial Jobless Claims report indicated a decrease to 192,000, lower than the anticipated median forecast of 197,000, implying that the labor market is gradually reducing layoffs, although this trend will need to persist in confirming a healthier labor market.

Bell Sounds and the Ride Begins

At the opening bell, certain Nasdaq stocks began strongly, with NVDA leading the way. The Nasdaq showed no indication of slowing down, even as the S&P 500 and Dow Jones futures surpassed their pre-market highs. Another factor contributing to the Nasdaq’s upward movement was that it encountered significant resistance at the 21-day exponential moving average (EMA).

The market’s upward momentum began to gradually slow down, akin to a rollercoaster as it made a turn at the high of the opening push, and the selling pressure intensified as the market’s inertia rolled lower. As the S&P 500 futures dipped below the Volume Weighted Average Price (VWAP), the psychological threshold of 4,000 became increasingly probable.

The S&P 500 futures broke through the 4,000 support level for the first time this month, with selling persisting below this level, causing the market to slide down to 3,975; however, a quick rebound occurred at this level, thanks to the support from the Nasdaq and stocks like Nvidia (NVDA), Apple Inc. (AAPL), and Amazon Inc. (AMZN), which spearheaded the market’s rally into the close.

The rebound was significant enough to cause each index to shift from negative to entirely positive. However, there was another rejection near the previous day’s high during the opening drive, with the price being turned away from the 4,030 level on the S&P 500 futures, further affirming the resistance being established near this level.

Two Levels to Watch to End the Week

The market’s closing level at the end of the session leaves it at an intriguing juncture, with a significant catalyst on the horizon. There are two critical levels to keep an eye on for the S&P 500 futures: 4,030 and 4,000. To sustain its upward momentum, the market must establish itself above 4,030. Conversely, if it falls below 4,000, this could indicate a possible downward trend, leading to a retest of today’s session’s low at 3,975.

Looming Catalyst Tomorrow

The Personal consumption expenditures (PCE) index will be released tomorrow at 8:30 a.m. Eastern. Many of the catalysts this week have seen more minor reactions than in the past, but this report may still significantly impact the market. PCE typically affects the market because it correlates with the Consumer Price Index (CPI) and the Producer Price Index (PPI). The three reports combine for a good gauge that the Federal Reserve (Fed) uses to discuss further rate hikes. 

Strong Recovery Causes Market to Close Green

The Nasdaq and the S&P 500 were positive to close the session. The S&P 500 futures closed up 0.46%, adding 19 points, while the Nasdaq futures closed up 0.85%, gaining 102 points. The Dow Jones futures followed, closing up 0.30%, an addition of 98 points.