19.12.202509:31 Forex Analysis & Reviews: Stock market on December 19: S&P 500 and NASDAQ bounce back

Yesterday, stock indices closed in positive territory. The S&P 500 increased by 0.79%, while the Nasdaq 100 gained 1.38%. The Dow Jones Industrial Average strengthened by 0.14%.

Asian stock markets followed Wall Street's lead, as the slowdown in US inflation reinforced the need for interest rate cuts by the Federal Reserve.

The euphoria that swept through US exchanges extended to the Asian region, where investors viewed the prospect of a more accommodative monetary policy from the Fed with optimism. Technology companies became the focal point, as their shares are traditionally sensitive to changes in interest rates. Lower rates translate to a reduced cost of capital for these firms, enabling them to invest more actively in new developments and expand their operations. Additionally, a rate cut positively influences overall economic activity, thereby increasing demand for products from technology companies. However, not all Asian markets reacted uniformly to the news. In some countries, concerns about sustainable economic growth and geopolitical tensions tempered investor enthusiasm.

The yield on 10-year Japanese bonds rose to multi-year highs after the Bank of Japan, as anticipated, increased borrowing costs. The MSCI Asia Pacific Index climbed by 0.7%, with significant contributions from tech giants such as SoftBank Group Corp. and Tencent Holdings Ltd. Positive sentiments were bolstered by an optimistic forecast from Micron Technology Inc., easing concerns regarding artificial intelligence spending and corporate valuations.

As noted earlier, US inflation data has strengthened risk appetite, despite caveats surrounding these figures related to the recent government shutdown. Given that inflation has significantly decreased compared to the previous month, it is evident that there may be room to continue lowering rates to support the labor market. If dovish rhetoric remains in favor, we are likely to witness a new wave of growth in the stock market.

In commodity markets, oil prices have dropped for the second time this week, despite tensions surrounding the US blockade of sanctioned tankers heading to Venezuela. Precious metals continue to be in demand, with platinum approaching $1,930 per ounce, marking its seventh consecutive day of growth and nearing its highest level since 2008.

Regarding the technical outlook for the S&P 500, the main task for buyers today will be to overcome the nearest resistance level of $6,784. Achieving this could signal further growth and open the opportunity for a surge to a new level of $6,801. An equally critical task for bulls will be to establish control above $6,819, which would strengthen their positions. In the event of a downward movement amid declining risk appetite, buyers must assert themselves around $6,769. A break below this level could quickly push the trading instrument back to $6,756 and pave the way down to $6,743.