On February 14, US equity markets experienced a disjointed session as investors wrestled with the implications of recent economic data and the specter of escalating tariffs. The Nasdaq Composite Index emerged as a bright spot, advancing by 0.41%, while the Dow Jones Industrial Average and the S&P 500 struggled, falling by 0.37% and a slight 0.01% respectively. A notable boost came from Airbnb’s impressive earnings report, which spurred its stock to climb 14.45%. This performance was echoed by tech giants Apple and Nvidia, whose increases of 1.27% and 2.63% played a significant role in bolstering Nasdaq’s upward momentum.
In the bond markets, 10-year US Treasury yields slid to a low of 4.447%, signaling investor anticipations of a potentially more dovish approach from the Federal Reserve. As traders look toward February 17, attention will pivot to commentary from FOMC officials. Their insights regarding inflation trends, recent retail sales figures, and perspectives on interest rate trajectories could heavily influence market sentiment and risk assessments.
The performance of European markets, particularly the DAX, is intricately linked to trade data emanating from the Eurozone, as well as guidance from central banks. Should trade data disappoint, along with a dovish stance from the European Central Bank (ECB), the DAX could experience downward pressure, potentially slipping closer to the 23,000 mark. Conversely, if the economic indicators are robust and the Fed adopts a hawkish posture, German equities may feel the weight, leading to a pullback toward 22,000. The ongoing turbulence in U.S. trade policy, coupled with geopolitical tensions, adds another layer of risk, particularly affecting export-dependent German stocks.
Looking at the trading week ahead, futures are showing early signs of optimism, with DAX futures up by 38 points and the Nasdaq 100 mini gaining 75 points. Despite the downtick on Friday, the DAX remains firmly above both the 50-day and 200-day Exponential Moving Averages (EMAs), which indicate a sustained bullish trend. A resurgence to the peak recorded on February 13 at 22,625 could embolden bullish traders to set sights on 22,750. On the flip side, a decline below 22,500 may see bearish momentum gather, aiming for the next support level at 22,350.
With the 14-day Relative Strength Index (RSI) currently at a notable 76.79, the DAX is considered to be in overbought conditions (where values exceed 70). Such positioning heightens the risk of selling pressure around the record high of 22,625, suggesting that traders should brace for potential volatility in the upcoming sessions. The intersection of economic reports, Fed commentary, and global trade dynamics will be critical in shaping market trajectories in the near term.