Dow Jones Industrial Average (DJIA) (Neutral)

• The stock market experienced a pullback at the week's start but surged following Nvidia's better-than-expected 4QFY23 earnings and outlook. Last week, the DJIA rose by 1.3% and the S&P 500 by 1.7%, both reaching all-time highs. The Nasdaq composite increased by 1.4%, hitting a two-year peak, slightly under the critical 16,000 level. The US 10-year treasury yield decreased by 4bps to 4.26%, with a notable 7bps drop on Friday. US crude oil futures declined by 2.5% to USD76.54 a barrel, largely due to a 2.2% fall on Friday.

• This week, notable companies like Zoom, Lowe’s, eBay, and Paramount are set to report their earnings as the 4Q earnings season draws to a close. This season has generally exceeded Wall Street's expectations, propelling the market to new highs. Additionally, the week will focus on the GDP report due Wednesday, a critical piece of economic data that Fed officials are monitoring ahead of anticipated rate cuts. A preliminary estimate in late January showed the GDP growing at an annual rate of 3.3% in the 4Q of last year, surpassing many economists' forecasts.

• Technically-speaking, the DJIA's weekly chart continued showcasing a rising trend channel, highlighting sustained market optimism and increased investor buying interest, as indicated by the rising MCDX's banker chip. Following a doji chart indicator and a positive close last week, the DJIA is poised for further growth ahead.

• Nevertheless, as the 4Q earnings season concludes and in the absence of significant economic data, gains are expected to be on a smaller scale this week, in our view. resistance levels are noted at recent highs of 39,282 and 40,257, with support at 38,136 (or the 5-week SMA) and 36,952, the previous cycle's peak.

Source: Kenanga Research - 26 Feb 2024