U.S. Stocks Lose Momentum Amid Buying Pressure Strain

Stocks, bonds, and the dollar stabilized after the Federal Reserve minutes confirmed the central bank’s cautious approach to interest rates.
Traders focused on the financial results of Nvidia Corp after the significant rise in the shares of major technology companies this year.

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Crosby pointed out

the details

In late trading, shares of the world’s top chip manufacturer plummeted as its latest forecasts failed to meet high investor expectations. The company stated that revenues for the current quarter would be around $20 billion. Despite surpassing analysts’ average estimates of $17.9 billion, some expectations had reached $21 billion.

The elevated expectations for Nvidia, which has tripled in value this year, leave little room for error, such as a decrease in earnings or signs of weak demand for the electronic chips it produces.

Loss of Driving Forces

Stocks lost momentum after the S&P 500 index added $6 trillion to its market value, driven by the artificial intelligence boom, the strength of American companies, and bets on the Federal Reserve shifting to interest rate cuts next year. This surge pushed the index to a mere 5% away from its all-time high.

Matt Maley, Chief Market Strategist at Miller Tabak + Co, commented, “The market is once again looking for comprehensive upward movement… Investors must be nimble in the upcoming period from late November to December.”

Regarding the market’s rise, which was directly based on the belief that the central bank had finished raising interest rates and was expected to cut them in 2024, the latest Federal Reserve meeting minutes reaffirmed their stance: officials are still not ready to declare victory over inflation, and they have no intention, for now, to ease monetary policy, according to Quincy Crosby of LPL Financial.

Crosby pointed out

“Today’s trading downturn is a result of reaching short-term buying peaks, not an indication that the market misunderstood the Federal Reserve’s message…
The market still sees that the central bank has finished tightening monetary policy and believes the economy will need help through interest rate cuts in 2024, regardless of the Federal Reserve’s messages.”

Short-term charts for the S&P 500 index currently show a negative deviation between price movement
(approaching its recent highs in 2023) and momentum (registering peaks lower than before),
according to Dan Wantrobski at Janney Montgomery Scott.

Wantrobski explained that “this is a sign that buying power is weakening even as the index looks to test the 4,600-point area…
Markets are now vulnerable to profit-taking/accumulation in the short term…
We still believe that stocks are susceptible to increased volatility/correction in the first half of 2024.”

U.S. Stocks Lose Momentum Amid Buying Pressure Strain

U.S. Stocks Lose Momentum Amid Buying Pressure Strain

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