- Wall Street Indexes rebounds on strong ISM Services PMI as election uncertainty lingers.
- Investors closely watch Congressional election results, as a unified government is seen as beneficial for stock market performance.
- Market volatility remains low as investors await election results and upcoming Federal Reserve and BoE decisions.
Wall Street Indexes rose in the early hours of the US session helped by a surprise US services activity print. Market participants continue to wait with bated breath on the outcome of the US Presidential election.
The ISM Services PMI in the US unexpectedly jumped to 56 in October 2024, the highest since August 2022, from 54.9 in September and beating forecasts of 53.8. The strong gain was mostly driven by a rebound in employment.
Concerns about political uncertainty grew compared to the previous month. Issues from hurricanes and labor problems at ports were often mentioned, but the impact of the longshoremen’s strike was less severe than expected because it was short-lived, according to Steve Miller, Chair of the ISM Services Business Survey Committee.
The ISM data gave Wall Street Indexes a boost with the S&P 500 seeing all 11 sectors in the green with Industrials .SPLRCI, Consumer Discretionary .SPLRCD and Information Technology .SPLRCT adding more than 1.3%.
On the earnings front, Palantir’s (PLTR.N) stock jumped 23% to a new high after the company increased its yearly revenue prediction for the third time. As the election has drawn closer Trump media continues its rally, with the group surging 14.4%. Big tech stocks also gained on the day, with Tesla increasing by 4% and Nvidia rising by 3.1%.
Trump or Harris: Congressional Elections Results also Key
As the election race heats up the latest polls are showing a tight race. There is growing attention to the congressional elections as well and this may be more important for market participants. The data suggests that US stocks perform better under a unified government as that would allow the President to make significant policy changes. A divided congress can at times be a hurdle for the incoming President especially with the opposing view on the economy and at times foreign policy.
Source: LSEG
Volatility has thus far been low this week as market participants weigh the various risks still ahead this week. After the elections we also have the Federal Reserve decision, the BoE and the University of Michigan sentiment preliminary numbers will be released on Friday.
Technical Analysis
Nasdaq 100
The Nasdaq 100 broke below the ascending channel but failed to push lower ahead of the election. Given the caution on display by market participants it is no surprise that US indexes have failed to push lower after last week’s selloff.
The Nasdaq has broken back above the lows of the ascending channel, however there is a chance that the US election could still be a shot in the arm for a deeper pullback.
Given the excellent US stock market performance this year, I think markets may be oblivious to whoever wins the election. Rather we could just get a spike in volatility and liquidity before markets continue their trend.
In the lead up to the election, many US voters were of the opinion that former President Trump is more pro free markets and better for the economy, however given the performance under the Biden administration markets might remain optimistic with a Harris victory. This makes the potential reaction by markets even more intriguing.
Either way, immediate resistance rests at 20484 and 20675 before the all-time highs around 20790 come into focus.
Conversely, a break below last week’s low at 19918 brings the possibility of a retest of the 100-day MA which rests at 19671. A break below this level will lead to a third touch of the ascending trendline which rests just below the 100-day MA.
Nasdaq 100 Daily Chart, November 5, 2024
Source: TradingView (click to enlarge)
Support
- 19918
- 19750
- 19536
Resistance
- 20484
- 20675 (all-time highs)
- 20790
