Pressure on the markets is returning ahead of tomorrow's important data on inflation in the United States, which may seriously surprise both those who bet on its decline and those who believe in its further growth. In any case, the markets are already reacting and reacting as expected – declining due to fears of maintaining high inflationary pressure in the near future. Pressure on the market is also being exerted due to several disappointing company reports. S&P 500 futures fell 0.3%, while the Nasdaq Composite sank almost 1%. The Dow Jones Industrial Average is trading almost unchanged.
Yesterday, weak earnings reports from Nvidia put pressure on the technology index. On the premarket, Nvidia fell again, losing another 3%. After growing for three consecutive weeks in the reporting season, there are more and more signs of slowing demand among the population – this indicates a likely continuation of the decline in GDP growth. The third quarter may also not differ much from the first. Second, when there was a sharp contraction of the economy contrary to all forecasts of economists and statements of representatives of the Federal Reserve System. The Fed's rate hike is already impacting the economy, but it is still not enough to restrain the growth of inflation. The tightening that the central bank resorted to by raising rates to 2.5% has just begun to affect the economy. This suggests that the medium-term underlying bearish scenario remains in force.
As noted above, investors are waiting for July's latest report on the consumer price index. This will clarify the situation and shed light on the Fed's further pace of interest rate hikes. Any increase in inflation above forecasts will lead to a sharp drop in stock prices, forcing the Fed to continue to resort to raising the level of borrowing.
Premarket
Novavax, the drugmaker, fell 32.3% in premarket trading after posting an unexpected quarterly loss and halving its annual revenue forecast. Novavax said it does not expect further sales of its COVID-19 vaccine in the US this year amid weak demand and oversupply.
Shares of Occidental Petroleum, an energy producer, rose 2.3% in premarket trading after news that Berkshire Hathaway increased its stake in Occidental to more than 20%.
Upstart securities fell by 12.2% in the premarket as the company did not meet the expectations of Wall Street economists for both the upper and lower income margins for the last quarter.
As for the technical picture of the S&P500
Nervousness in the market is growing, and buyers who missed $ 4,157 yesterday no longer feel completely safe. At the moment, we need to try very hard to offer something in the area of the nearest support of $ 4,116, which will somehow even out the situation with short positions and stop the panic. It will be possible to talk about the growth of the index only after the return of the new resistance of $ 4,150 under control. This is the only way we will see fairly active growth in the $ 4,184, where large sellers will return to the market again. At a minimum, there will be those who want to lock in profits on long positions. A more distant target will be the $4,234 level. In the case of new weak corporate reports and a breakdown of $4,116, buyers will have to defend the support of $4,091. A breakthrough in this area will push the trading instrument back to $4,064 and $4,038. Having missed this level, the S&P 500 will sink into the area and $4,003. The longer-range target remains the area and $3,968, where buyers will start acting more aggressively again.
