Nasdaq 100 forecast: Key US employment data in focus

Global stocks rallied sharply last week, supported by big stimulus announcements from China while confidence grew about another outsized rate cut from the Fed this year. This week, US data will take centre stage, with key employment indicators in focus. We will also have some important data from China first thing in the week, before it goes on a week-long holiday. But despite the big rally in Chinese markets and the Dow and DAX hitting fresh records, the Nasdaq and S&P both fell into the close on Friday as technology stocks fell. While the Nasdaq 100 forecast is still bullish, Friday’s price action suggests we could be in for a consolidative period or a small pullback in early parts of the week – especially given the further escalation in the Middle East conflict.

Before we look ahead to this week’s top events, let’s take a look at the Nasdaq chart.

Nasdaq 100 forecast: technical levels to watch

Source: TradingView.com

The higher highs and higher lows, and not to mention the record-setting indices like the Dow Jones and S&P 500, all point to a bullish technical Nasdaq 100 forecast. However, the Nasdaq fell into the close on Friday, suggesting that the bullish trend may have weakened ahead of this week’s key events and upcoming earnings season. So, a bit of a pullback in early this week should not come as major surprise. Key support comes in around the 21-day exponential moving average, which sits inside a key pivotal range between 19285 to 19635. This area needs to hold to maintain the bullish trend. If it breaks, then expect to see a big follow-up drop, perhaps towards the 200-day average. Conversely, if last week’s high of 20315 breaks, then this could pave the way for a run towards the July record high of 20759.

Chinese PMIs could reinforce growth worries (Monday)

China is stepping up efforts to combat its economic slowdown, with a significant fiscal spending push aimed at hitting its growth targets. Reports suggest the Chinese government may inject up to 1 trillion yuan into major state-owned banks to boost lending capacity. This follows the central bank’s largest stimulus package announced last week since the pandemic, sending the local markets soaring. If the upcoming data points to further deterioration in China’s economic health, it could reignite concerns over short-term demand, potentially impacting market sentiment in a negative, especially as China will be out for the rest of the week.

JOLTS Job Openings could steal the show (Tuesday)

Among this week’s key US economic data, the JOLTS report on Tuesday could be the highlight. With the Federal Reserve’s focus shifting from inflation to employment, this report takes on extra importance. The Fed’s aggressive rate cut in September has already shown their concern over a weakening job market. If the trend continues, it could increase the probability of another 50-basis-point rate cut in November, applying additional downward pressure on the dollar and support for equity markets. Pay close attention to employment metrics in the ISM services and manufacturing PMIs for further clues. But with much of the rate expectations in the price, you do have to wonder how much of a further lift these figures will give to the market.

US Non-Farm Payrolls should impact Fed’s November decision (Friday)

This will be the highlight of the week, make no mistake about it. In August 2024, the US economy added 142,000 jobs, falling short of the 160,000 forecast. Revisions to previous months showed July's figures lowered by 25,000 and June’s by 61,000. However, the unemployment rate dropped to 4.2%, while average weekly earnings exceeded expectations, growing by 0.4%. Concerns about the labour market prompted the Fed to cut rates by 50 basis points in September. If job growth continues to cool, it increases the likelihood of another 50-basis-point cut in November, further fuelling the reflation trade. However, a surprisingly strong jobs report could shift market expectations sharply.

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R