E-mini S&P and NQ Slip as Powell Tempers December Rate Cut Expectations

E-mini S&P (December) / E-mini NQ (December)

S&P, yesterday’s close: Settled at 6922.75, down 3.00

NQ, yesterday’s close: Settled at 26,262.50, down 99.00

The Federal Reserve cut rates by 25bps yesterday, but Fed Chair Powell said another move in December is ‘far from’ a sure thing. His comments knocked stocks off their highs, sent Gold and Treasuries lower, and strengthened the U.S. Dollar. According to the CME’s FedWatch Tool, the probability of a cut in December has gone from a sure thing to about a 70% probability.

I also found it interesting that Powell specifically said that today’s booming companies, “are not in a bubble and are very different from those in the dot-com era. The companies today have real earnings and business models. He added that they are making good investments in data centers that have real net present values.” His comments came nearly an hour before three of the six largest companies in the S&P, by market cap, reported earnings. GOOG crushed estimates and is +7% ahead of the bell. MSFT had a great report, but its guidance may have underwhelmed; the stock is -3%. META disappointed with a whiff on earnings due to a one-time tax hit stemming from changes under the Big Beautiful Bill; the stock is -8%. Apple and Amazon are due after the bell today.

Price action during yesterday’s Fed meeting defined a range in the E-mini S&P. Major three-star support at 6901.50-6903 was sticky, while that at 6876.50-6877 held the low of 6882.25. Also, key support at 6890-6892 was not violated after the initial spike. Levels have been adjusted slightly below. To the upside, a new high of 6953.75 traded overnight, but our 6948.25 level has kept further rally attempts contained. Price action is back in the middle of the range, and our Pivot and point of balance will prove crucial through the opening bell. If the buyers can keep it above…