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Nasdaq 100 Forecast: QQQ rises cautiously ahead of Nvidia earnings

Article By: ,  Senior Market Analyst
November 20, 2024 9:20 AM

US futures

Dow future 0.2% at 43350

S&P futures 0.07% at 5920

Nasdaq futures 0.13% at 20700

In Europe

FTSE 0.15% at 8112

Dax  0.3% at 19123

  • US stocks rise modestly with earnings in focus
  • Nvidia is set to be the litmus test for the AI trade
  • Target slumps after Q3 earnings & revenue miss
  • Oil rises quietly with mixed factors in play

Nvidia to act as a litmus test for the AI trade

U.S. stocks are pointing to a quietly higher open as investors await Nvidia’s quarterly results, which on Saturday will be a litmus test for the AI trade.

Nvidia is scheduled to report earnings after the closing bell. The share price is trading modestly higher pre-open after jumping 5% yesterday.

The results come as the share price is up almost 200% so far this year, accounting for around 20% of the S&P500’s returns. Nvidia’s earnings can create a reaction across the broader market.

The U.S. economic calendar is quiet; attention remains on Trump and the selection of his cabinet. Although the Treasury Secretary nomination, arguably the most keenly awaited nomination, has yet to be announced, Trump is expected to announce his pick soon. Howard Lutnick has been nominated to lead the trade and tariff strategy, heading up the Commerce Department.

Elsewhere, geopolitical concerns are easing due to reports that Russian President Putin was open to discussing a ceasefire deal with Donald Trump. Geopolitical tensions had ramped up yesterday after Putin lowered the threshold for a nuclear attack.

Looking ahead, comments from Fed officials, including Lisa Cook, Michelle Bowman, and Susan Collins, are scheduled across the day and could provide further clues about the future path for Fed rate cuts.

Corporate news

Target is plunging 17% after forecasting holiday quarter compatible sales and profits below Wall Street's expectations, having missed Q3 estimates. Retailers such as Dollar Tree and Dollar General were also falling following Target's results.

Crypto stock MicroStrategy is pointing to a stronger open after posting gains of 11% yesterday and 117% across the month. Bitcoin rose to an all-time high of 94,000 overnight.

Delta Airlines is set to fly 1% lower after guiding for revenue growth of just a single-digit percentage in 2025.

Nasdaq 100 forecast – technical analysis.

The Nasdaq trades within a rising wedge. After reaching an all-time high of 21,232, the Nasdaq 100 rebounded lower but found support on the rising trendline support. Buyers supported by the RSI above 50 will look to rise above 20,750, the July high, before bringing 21k and 21,232 back into focus. Failure to rise above 20,750 could see the price test the rising trendline at 21,500. A fall below 20,300 creates a lower low and opens the door to 20k.

FX markets – USD rises, EUR/USD falls

The USD is rising, recovering from a weekly low after a three-day slide in profit-taking. The Trump trade is resuming as investors await further clues on President-elect Trump's proposed policies and Treasur Sectretary selection.

EUR/USD is resuming its downtrend as the market weighs up more data from the region and owing to the stronger U.S. dollar. Eurozone negotiated wage growth accelerated in Q3, rising 5.4% from 3.5%. ECB policymakers have previously highlighted strong wage growth as an obstacle to cutting interest rates more aggressively.

GBP/USD is falling on a stronger USD and despite UK inflation rising by more than expected in October. CPI rose to 2.3% YoY up from 1.7% in September. Service sector inflation, a marker the BoE watches closely, also rose by more than expected to 5%. The data highlights the struggles the central bank is having in taming inflation. The market has lowered its rate cut expectations for the coming year.

Oil inches higher amid mixed forces.

Oil prices are inching higher after strong gains earlier in the week as the oil markets weigh up mixed drivers on the supply side and a larger-than-expected build in US inventories.

Oil prices have not reacted much to rising geopolitical tensions between Russia and Ukraine, although this could be helping to keep a floor under the market. A further escalation in the confrontation could boost oil prices higher on fears that Ukraine could target Russia’sa oil infrastructure.

Meanwhile, Norway's Equinor has restored total output capacity following a power outage, bringing supply back to the market.

On the demand side, US crude stockpiles rose by 4.75 million barrels in the week ending November 15th, a larger than 100,000 barrel build that had been expected.

EIA data is due later today.

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