The Nasdaq pulled back after a more aggressive tone from Fed Chair Powell and a weaker-than-expected Non-Farm Payrolls (NFP) report. This report affected market sentiment and lowered growth expectations. However, Fed’s Williams kept an open mind for September’s meeting. Markets are now expecting 58 basis points of easing by year-end, up from 35 basis points before. Also, recent lower inflation figures from ISM Manufacturing and UMich reports might boost the stock market. Key upcoming events include the ISM Services PMI and Jobless Claims data. If inflation stays low and jobless claims improve, it could help the Nasdaq rise. This might also make Fed Chair Powell consider a rate cut in September during the Jackson Hole Symposium.

Technical Analysis Of Nasdaq

Looking at the daily chart, the Nasdaq’s pullback may find support around the 22,400 level. Buyers might jump in here for another upward move, while sellers are eyeing the 21,000 level. On the 4-hour chart, dip-buyers have been propping up the trendline at 22,800. For an upward trend to continue, buyers will aim for new highs. The 1-hour chart suggests a potential double bottom, with minor support at 23,000, where buyers may act to keep the upward momentum. The market is still adjusting to last week’s disappointing jobs report from August 1, 2025. The Non-Farm Payrolls (NFP) number for July was just 155,000, below the 190,000 expected. This disappointment, along with Fed Chair Powell’s slightly firm comments last month, triggered the Nasdaq’s initial pullback. Consequently, we now expect about 58 basis points of rate cuts from the Federal Reserve by year-end, a significant increase from the 35 basis points anticipated before the jobs report. This outlook is backed by the latest PCE inflation data for June 2025, which remained stable at 2.6%. The Fed’s path to easing seems clearer.

Focus On Upcoming Data

Everyone is focusing on this week’s data to confirm a dovish trend. The ISM Services PMI report is set to be released tomorrow, and we will pay close attention to its Prices Paid component, which recently dropped to 49.5 in the manufacturing report. A similar decline indicating reduced price pressures would be very positive for stocks moving forward. For derivative traders, this presents a good chance to position for a potential rise in the Nasdaq. Buying calls or long futures on dips towards the 23,000 level offers a solid risk-to-reward opportunity. Last week, buyers were very active at the 22,800 trendline, showing strong interest in buying during market weakness. On the flip side, if the market falls below the important trendline around 22,800, it would suggest the bullish setup is failing. A surprisingly high inflation number from tomorrow’s ISM report could trigger such a decline. In that case, traders might consider buying puts or shorting the market, targeting the more significant support zone at 22,400. Looking back to late 2023, we saw the market react positively once it believed the Fed’s rate hikes were finished. This change in expectations led to a strong multi-month rally for the Nasdaq into 2024. We might be at the start of a similar move now if the upcoming data supports it. Create your live VT Markets account and start trading now.

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