Wall Street Soars on Fed Dovish Pivot

Key Takeaways:

*Fed Pivot Fuels Rally – Wall Street surged as Fed officials signaled imminent rate cuts, lifting tech and growth stocks on lower discount rate expectations.

*Economic Risks Mount – Weak JOLTS data, falling factory orders, and Beige Book warnings on stagnant activity highlight late-cycle fragility.

*Jobs Data Critical – Friday’s NFP will decide if markets keep cheering “insurance cuts” or shift toward “emergency easing” amid rising recession fears.

Market Summary:

Wall Street rallied sharply this week, with the S&P 500 and Nasdaq extending gains as markets embraced the Fed’s dovish pivot. Equities found renewed momentum after Governor Waller’s call to “start cutting rates at the next meeting,” a message echoed by other policymakers who signaled that labor market fragility now outweighs inflation risks. Futures are now pricing multiple cuts into year-end, creating what investors see as a “sweet spot” for equities: stimulus on the horizon without a fully realized downturn. Growth and technology names, especially the megacap sector, led the charge as falling discount rates boosted valuations of future earnings streams.

Yet, beneath the euphoria, underlying risks remain pronounced. The weak JOLTS report—job openings falling below unemployed workers for the first time since 2021—underscores a cooling labor market, a classic late-cycle warning. The Fed’s Beige Book added to the gloom, citing stagnating activity across districts, wage growth lagging inflation, and widespread tariff-driven price increases. Corporate profits are under pressure from rising input costs, while factory orders have contracted for two straight months, signaling cracks in the manufacturing base.

Geopolitics and policy uncertainty further complicate the backdrop. President Trump’s escalating attacks on Fed independence and efforts to remove Governor Lisa Cook raise concerns about institutional stability, while OPEC+’s potential supply hike could shock oil markets. Although cheaper crude may relieve consumer inflation pressures, it risks signaling broader demand weakness—a dynamic that could eventually weigh on equity sentiment.

In the near term, Wall Street’s direction hinges on Friday’s Nonfarm Payrolls. A modestly soft print could extend the “insurance cut” narrative and fuel further equity gains, but a deeply weak report risks flipping sentiment toward recession fears and “emergency easing.” For now, equities remain buoyed by liquidity expectations, even as the macro foundations of the rally grow increasingly fragile.

Technical Analysis

NASDAQ, H4: 

Nasdaq (NDX) has rebounded from the $23,016 support floor, establishing a triple-bottom structure that signals strong defense from buyers. Price has since reclaimed the $23,277–$23,367 zone and is now pressing against resistance at $23,472, marking an early attempt to shift the near-term trend bias. 

Momentum indicators are turning constructive. The RSI stands at 52, recovering from oversold levels and holding above its signal line, suggesting improving buyer control. Meanwhile, the MACD has flattened and is attempting a bullish crossover, hinting at a possible momentum shift after recent downside pressure.

Overall, Nasdaq carries a cautiously bullish-to-neutral bias above $23,277, with confirmation above $23,472 needed to validate upside continuation toward $23,683 and $23,940. On the downside, a failure to sustain this recovery could keep the index vulnerable to another retest of $23,016 before broader direction takes shape.

Resistance level: 23,472.00, 23,683.00

Support level:23,277.00, 23,016.00