US stock index futures continued to decline in morning trading on Thursday as mixed signals about the US economy and interest rates weakened investor confidence and lowered their sentiment. Nasdaq 100 technology index futures are trading in the red after showing a 1.5% decline on Wednesday. S&P 500 futures fell by -0.3%. European indices are also all in the red zone.
The dollar is gradually strengthening against a basket of currencies. At the same time, the yield of 10-year Treasury bonds resumed its growth after a slight decline on Wednesday amid signals from representatives of the Federal Reserve System that they plan to continue to pursue a tough policy. The inversion of the yield curve remains a sign of investor concern about the future of the world's largest economy.
Obviously, after the good inflation data, there was much less optimism in the market, especially after the Fed representatives did not change their tone in any way. The rally ended as quickly as it started. Stronger-than-expected US economic data indicate a fairly good state of the US economy. If today's reports on the real estate market also demonstrate stability, the pressure on stock indices will only increase, as this will allow the Federal Reserve System to shift its decision to end the rate hike cycle later than expected.
Every time traders start speculating that the Fed intends to end the cycle of tightening its policy, FOMC officials make new hawkish statements. This is done so that market participants make the right decisions and do not feed only on rumors and expectations. Given that inflation is just beginning to decline after reaching a record level in decades, and retail sales in the United States continued to grow at the fastest pace in the last eight months, it's probably too early to talk about some easing by the Fed.
Yesterday, San Francisco Fed President Mary Daly said that a pause in raising rates is "not discussed." New York Fed President John Williams noted that the central bank should avoid including financial stability risks in its considerations.
Oil continues to decline as investors have again turned their attention to concerns about the prospects for demand after the easing of geopolitical tensions. Shares of chip manufacturers rose on the premarket in New York: Nvidia Corp. gained more than 2.5% thanks to good quarterly sales that exceeded the forecast. Cisco Systems Inc. shares jumped 4% thanks to an optimistic revenue forecast, while competitors Advanced Micro Devices, Inc. and Intel Corp. also pulled up.
As for the technical picture of the S&P 500, the market continues to fall today after yesterday's collapse at the end of the day. The main task for buyers now is to protect the support of $3,942. As long as trading is conducted above this level, we expect continued demand for risky assets. This will create good prerequisites for strengthening the trading instrument and returning $3,968 and $4,003 under control. The level of $4,038 is slightly higher? A breakthrough will strengthen the hope for a further upward correction with an exit from the resistance of $4,064. The furthest target will be the area of $4,091. In a downward movement, buyers are obliged to declare themselves at $3,942. A breakdown of this range will quickly push the trading instrument to $3,905 and open the possibility of updating the support level to $3,861.