US Tech forecast: the index resumes growth and is poised to hit a new all-time high

The US Tech index has entered an uptrend as part of the Santa rally. The US Tech forecast for next week is positive.

US Tech forecast: key trading points

• Recent data: US ADP employment change declined by 32 thousand in November
• Market impact: the current data is generally positive for the technology sector

US Tech fundamental analysis

The ADP employment report came in significantly weaker than expected, with the private sector losing 32 thousand jobs instead of growing by 5 thousand, compared to 47 thousand added in the previous month. This is a sharp reversal and a signal that companies have become more cautious about hiring, while some industries are already implementing layoffs. For the market, this is an early warning sign: the data points to a noticeable cooling of the economy and could amplify discussions about risks of slowing growth or even a technical recession if similar dynamics appear in official payrolls.

For the US stock market as a whole, such a report has a dual effect. On the one hand, a weak labour market puts potential pressure on corporate earnings, especially in cyclical sectors dependent on consumer spending and business investment. In this context, investors may reduce their interest in industrials, commodities, and retail stocks, and some market participants may lock in profits following the recent rallies. On the other hand, such weak labour data significantly boosts expectations of a more accommodative Federal Reserve policy.

US Tech technical analysis

For the US Tech index, the impact of the ADP report tends to lean towards a moderately positive reaction, at least initially. The technology sector is particularly sensitive to interest rates because a substantial portion of its valuation relies on future earnings. When market participants begin to price in earlier or deeper rate cuts, long-term bond yields tend to decline – a development that typically supports technology shares.

The US Tech index has entered an uptrend, with the nearest resistance level at 25,655.0 and the support level at 25,150.0. An upside target could be the 26,170.0 level.

The US Tech price forecast outlines the following scenarios:

• Pessimistic US Tech scenario: a breakout below the 25,150.0 support level could send the index to 24,020.0
• Optimistic US Tech scenario: a breakout above the 25,655.0 resistance level could drive the index to 26,170.0

Summary

The latest ADP report creates a backdrop of heightened volatility for the US stock market and the US Tech index. For the broader market, it signals rising macroeconomic risks while simultaneously strengthening expectations of Fed easing. For the technology sector, the near-term outlook may favour growth thanks to falling bond yields and increased capital inflows into growth stocks. However, the durability of this effect will depend on whether the labour market weakness proves temporary or becomes a persistent trend. The next upside target could be the 26,170.0 level.

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