US Tech forecast: the index shows weak growth

The US Tech index continues to trade in an uptrend, but a new all-time high has not yet been reached. The US Tech forecast for the next week is positive.

US Tech forecast: key takeaways

• Recent data: the US PPI rose by 0.2% in December compared to November
• Market impact: the current data is moderately negative for the technology sector

US Tech fundamental analysis

The US Producer Price Index (PPI) increased by 0.2% month-on-month, fully in line with market expectations and slowing noticeably from the previous reading of +0.6%. For equity markets, such dynamics are generally perceived as moderately favourable, since the PPI is an early indicator of price pressure in supply chains, and its slowdown reduces the risk of accelerating consumer inflation in the coming months. As a result, the likelihood that the Federal Reserve will need to maintain tight monetary conditions decreases.

Since the figure came in exactly in line with the consensus, the immediate market reaction may be restrained. Investors typically price in expected data in advance, and further price movements are often driven by report details (the structure of price changes across categories), accompanying macroeconomic releases, and Fed officials’ rhetoric. Nevertheless, the slowdown compared to the previous month contributes to more comfortable inflation expectations and reduces the risk of sharp upward revisions to the interest-rate path.

US Tech technical analysis

For the US Tech index, the impact is typically more pronounced than for the broader market, as the technology sector is more sensitive to changes in yields and the discount rate. If the PPI slowdown is interpreted as a factor supporting lower or stable Treasury yields, this will create favourable conditions for the revaluation of growth companies and support the performance of the technology index. In addition, more moderate producer-level price pressure may be seen as an improvement in cost conditions for some companies, although in the technology sector, the direct impact of the PPI on costs is often less significant than its indirect effect via rates and overall financial conditions.

The US Tech index entered an uptrend. The nearest resistance level has formed at 25,875.0, while the support level has shifted to 25,410.0. Prices are moving higher towards resistance, with a high probability of a breakout. The upside target could be at 26,265.0.

The US Tech price forecast outlines the following scenarios:

• Pessimistic US Tech scenario: a breakout below the 25,410.0 support level could send the index to 25,095.0
• Optimistic US Tech scenario: a breakout above the 25,875.0 resistance level could drive the index to 26,265.0

Summary

The PPI release, which was in line with expectations but slower than last month, is a moderately positive signal for the US equity market and potentially even more favourable for the US Tech Index. However, the scale of the reaction is likely to remain limited, as the figure came out in line with forecasts, and will depend on yield movements and subsequent inflation signals. The nearest upside target could be 26,265.0.

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