Looking to the Futures

Turbulence in Tech to Star the Week

June 25, 2024 Chris Waterbury
Equity markets were mixed to start the week after tech stocks sold off.

Equity markets were mixed to start the week after tech stocks sold off. Merger and acquisition announcements provided some support for stocks. Economic announcements this week will paint a better picture for upcoming FOMC actions. Fed comments made yesterday were dovish, however, billionaire investor David Rubenstein stated on CNBC that the Fed is unlikely to lower rates prior to the presidential election in November. Global bond yields increased slightly yesterday with Treasury's trading flat.

Chip stocks sold off yesterday pushing the Nasdaq 100 lower. Truist Advisory Services indicated concern of over valuation downgrading the technology sector to neutral from overweight, fueling the downturn from major chip manufacturers like Nvidia and Super Micro Computer Inc.

In the bull camp markets saw support form an increase in M&A activity. RXO Inc. agreed to purchase United Parcel Service's asset light freight brokerage business, Coyote Logistics, for over $1 billion. Sonoco Products has agreed to purchase Eviosys from KPS Capital Partners for $3.9 billion. 

Economic news came in weaker than expected yesterday with the US Jun Dallas Fed manufacturing outlook survey increasing +4.3 to -15.1, missing the expected -15.0. The US May Core PCE deflator announcement this Friday will indicate whether monetary policy has helped reduce inflationary pressures. The consensus is the May core PCE deflator will increase +2.6% y/y, down from April’s +2.8% y/y increase. 

Chicago Fed President Goolsbee took a dovish approach yesterday, questioning whether the Fed's restrictive policy is putting too much pressure on the economy. During a CNBC interview on Monday David Rubenstein, co-founder of the Carlyle Group, stated that he thinks it is unlikely that the Fed will make a rate change prior to the election in November. 

Global bond yields increased slightly yesterday. As of the time this article was written the 10-year US Treasury note yield was up +0.8 bp at 4.263%. The German bund yield had increased +1.5 bp to 2.427% and the UK gilt yield was up +0.1 bp to 4.084%.

Technicals

Looking at the daily chart for the E Mini Nasdaq 100 September Index Futures (/NQU24) contract we can see significant selloff after reaching all time highs last week. The contract had used the 20-Day Simple Moving Average as its support level as it climbed significantly higher. We will see if that level can hold this recent downturn. 

According to the CFTC Commitment of Traders Report released June 11th asset managers have decreased their long position by -3,302 contracts and decreased their short position by -245 contracts. Asset managers are net long 81,805 contracts. 

The 14-Day Relative Strength Index at 61.72% indicates the contract still has more buyers than sellers but is down significantly from the 82% level seen a week ago.

E Mini Nasdaq 100 September Index Futures (/NQU24) Chart

E Mini Nasdaq 100 September Index Futures (/NQU24) Technicals

E Mini Nasdaq 100 September Index Futures (/NQU24)

Economic Calendar

Consumer Confidence                          10:00 AM ET

FHFA Housing Price Index                    9:00 AM ET

S&P Case-Shiller Home Price Index     9:00 AM ET

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