SPX500 Helped by Tesla’s Strong Results, Now Cautious Ahead of US PCE Inflation
SPX500 Analysis
Tesla reported record revenues for the fourth quarter and full 2022 and overall solid financial results on Wednesday after markets closed [1], with CEO Elon Musk talking of a "fantastic year" during the earnings call [2]. Furthermore, he dismissed fears over demand, sparked by a widening production/delivery gap and recent price cuts, saying that the firm has the "strongest orders" in its history so far in January.
Investors reacted positively to the results, sending TSLA.us nearly 11% higher on Thursday. This helped broader sentiment in Wall Street and helped SPX500 to a profitable day and higher highs.
Yesterday's economic data from the US meanwhile had limited impact as they were good enough to maintain the positive momentum, but not strong enough to change expectations for a less aggressive Fed. Durable goods orders posted their biggest increase (+5.6% since July, while preliminary data showed that the economy grew by robust annualized 2.9% in Q4, but less that the +2.3% of Q3.
Markets continue to expect another slowdown in the pace of monetary tightening, with CME's FedWatch Tool pricing in a 25 basis points rate hike next week [3]. without any meaningful pushback by Fed officials.
However, market participants now turn to today's Personal Consumption Expenditures, which will be taken into account by policymakers when they deliver their rate decision and can affect the trajectory of US indices. Inflation has been easing recently and another soft print would fortify hopes for a Fed pivot, but a resurgence could dent the optimism.
NAS100 is having a good month and runs a profitable week, which brings the December highs (4,145-55) in its corshairs, but it may be early to talk for further advance that would allow it to challenge 4,326.
On the other hand, the index is cautious today, as investors brace for the PCE inflation update. Renewed pressure back towards the EMA200 (3,960-40) would not surprise us, but NAS100 seems well protected from that point on. The ascending trendline form the 2022 lows follows and a strong catalyst would be required for a convincing break below both of those technical levels.
Nikos Tzabouras
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
References
| Retrieved 26 Jan 2023 https://tesla-cdn.thron.com/static/SVCPTV_2022_Q4_Quarterly_Update_6UDS97.pdf | |
| Retrieved 26 Jan 2023 https://www.youtube.com/watch | |
| Retrieved 30 Mar 2023 https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html |
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