Where we are: Nasdaq futures are currently trading at 28950.25, up 1.38% and near the day’s high of 28975.25. This represents a substantial recovery from the cash market close of 25806.20 and suggests a strong open for the New York session. The overnight range has been relatively contained, indicating consolidated bullish sentiment ahead of key US data.
What’s driving it: The primary driver is renewed optimism surrounding the tech sector, spurred by strong earnings prospects and the perception of value after a robust earnings season. This positive sentiment is amplified by lower US yields, with the 10-year yield at 4.357%, reflecting a slight easing of monetary policy concerns. Despite this, the 10-year breakeven inflation rate has edged up to 2.45%, suggesting that inflation expectations remain somewhat anchored.
- CNBC World reported that analysts believe tech stocks offer their best value in years.
- The US 10-year yield has dipped to 4.357%, down 3.0 bps on the day.
- CFTC data reveals a crowded short positioning in Nasdaq 100 futures, with net non-commercial contracts at -2,322, near the 0th percentile, creating a potential squeeze risk.
NY session focus: All eyes are on the 08:30 ET releases of Average Hourly Earnings and Non-Farm Employment Change, which will heavily influence market sentiment. A weaker-than-expected jobs report could further fuel the rally, while stronger data might temper gains. Key levels to watch are 29,000 as immediate resistance and 28,500 as support. The trade that’s working is long tech on the dip, but the trade at risk is shorting Nasdaq given the crowded positioning and potential for a squeeze. The pain trade would be a hawkish surprise, leading to a rapid reversal and short covering.