U.S. stocks ended mostly higher on Friday even though the U.S. central bank might raise interest rates sooner than previously expected. The U.S. Federal Reserve switched to a more hawkish tone forecasting two interest-rate hikes before the end of 2023.
Bank of America reported that only a financial market crash would prevent the U.S. central bank from tightening its policy in the next six months. The Federal Reserve’s ultra-loose monetary policy is good for risk-takers, and investors will continue to pay attention to the bank’s commentary looking for any clues.
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“The current state of near-zero interest rates and $120/billion per month in asset purchases have created extremely loose financial conditions, which in conjunction with the vaccines and re-opening process, is what has allowed the stock market to hit all-time highs,†said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
FED raised expectations for real GDP growth in 2021 to 7.0%, while the news that U.S. President Joe Biden has secured a bipartisan infrastructure agreement with lawmakers also positively influenced the stock market.
The agreement is valued at more than one trillion over eight years, of which $579 billion in new spending. The U.S. economy continues to move in the right direction; still, Wall Street’s three main indexes’ upside potential remains limited for now, and probably it is not the best moment for investing in Microsoft Corporation (NASDAQ: MSFT), Nvidia (NASDAQ: NVDA), and Netflix (NASDAQ: NFLX).
Microsoft shares continue to trade above $260
When we look at the chart above, we can see that this stock price has advanced around 20% since the beginning of the 2021 year. The critical support levels are $250 and $230; $270 and $280 represent the resistance levels.
If the price falls below the $250 support level, it would be a firm “sell†signal and maybe a trend reversal sign. On the other side, if the price jumps above $270, we have the open way to $280.
Nvidia is trading close to the $800 resistance level
Nvidia shares have advanced from $542 above $776 since the beginning of April 2021, and the current price stands around $761.
If the price jumps above $800, it would confirm a bullish trend, but if the price falls below $600, it would be a firm “sell†signal and a trend reversal sign.
Netflix shares are still not able to advance above $540 resistance
Netflix shares have been moving in an uptrend last several days, but the price can still not advance above $540 resistance.
If the price jumps above $540, the next target could be around $550, but if the price falls below $500, it would be a strong “sell†signal.
Summary
The U.S. economy continues to move in the right direction; still, Wall Street’s three main indexes’ upside potential remains limited for now, and probably it is not the best moment for investing in Microsoft Corporation, Nvidia, and Netflix. Bank of America reported that only a financial market crash would prevent the U.S. central bank from tightening its policy in the next six months.
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