Wall Street Hits New Records as Fed Dovish Bets Gain Traction

Key Takeaways:

*S&P 500 and Nasdaq hit fresh record highs as investors priced in a Fed rate cut, with Treasury yields dropping to their lowest since May.

*U.S. retail sales report will serve as the final key input before the Fed decision, with a weak print likely reinforcing dovish expectations.

*Tesla rallied over 6% on Musk’s $1B stock purchase, extending a 20% three-day surge, while U.S.-China trade talks in Madrid remain in focus.

Market Summary: 

U.S. stocks advanced for a third consecutive session, propelling the S&P 500 and Nasdaq Composite to fresh all-time highs as investors increased bets on a dovish pivot from the Federal Reserve at tomorrow’s policy meeting. Market expectations have fully priced in a 25-basis-point rate cut, with U.S. Treasury yields retreated to their lowest levels since May amid broad anticipations of a prolonged easing cycle.

Attention now turns to today’s U.S. retail sales report—the last major economic indicator before the Fed’s announcement. A softer-than-expected reading could reinforce the case for a more accommodative stance, potentially fueling further equity gains, while stronger data may temper the pace of rate cut expectations.

Beyond monetary policy, market sentiment was supported by ongoing U.S.–China trade negotiations, with delegations convening in Madrid for a third round of talks aimed at de-escalating recent tensions. A constructive dialogue could alleviate one of the key overhangs on global growth expectations.

On the corporate front, Tesla surged more than 6% after CEO Elon Musk disclosed a $1 billion personal stock purchase, extending the electric-vehicle maker’s three-day rally to over 20% and contributing significantly to the Nasdaq’s outperformance.

With the Fed decision looming, trading is likely to remain sentiment-driven. A confirmed cut accompanied by dovish forward guidance could extend the rally, though some consolidation may follow given recent steep gains.

Technical Analysis

Nasdaq, H1:

The Nasdaq Composite continues to advance within a well-defined uptrend, establishing a pattern of higher lows that reinforces a structurally bullish medium-term bias. The index remains trading firmly within its ascending channel, supported by sustained investor appetite for technology equities.

A Fair Value Gap (FVG) has emerged following a recent sharp upward move, creating a technical imbalance that often attracts price action for a retest. This raises the possibility of a near-term pullback to fill this gap, which would likely serve as a healthy consolidation within the broader upward trajectory rather than a reversal of trend.

Momentum indicators present a mixed near-term picture. The Relative Strength Index remains in overbought territory, reflecting strong and persistent buying pressure. However, the Moving Average Convergence Divergence is showing early signs of a potential bearish crossover—often referred to as a “death cross”—at elevated levels, suggesting that upward momentum may be slowing and a technical retracement could be imminent.

Resistance Levels:24,372.00, 24,455.00

Support Levels: 24,265.00, 24,155.00

Tesla (TSLA), H4

Tesla Inc. shares have surged more than 30% following a decisive breakout above a multi-week asymmetric triangle pattern, signaling a robust shift in momentum and reinforcing a bullish technical outlook. The move, fueled by renewed investor confidence and strong volume participation, suggests the potential for further gains toward uncharted territory.

However, the rapid ascent has created a significant gap from the previous session’s close—a technical imbalance that often attracts price action for a retest. A near-term pullback to fill this gap would be viewed as a healthy consolidation within the broader uptrend, potentially offering a more sustainable foundation for the next leg higher.

Momentum indicators reflect both strength and caution. The Relative Strength Index has advanced deeply into overbought territory, indicating powerful buying pressure but also raising the risk of a short-term technical retracement. Meanwhile, the Moving Average Convergence Divergence continues to trend higher above its zero line and is exhibiting bullish divergence, confirming that underlying momentum remains strongly supportive.

Resistance Levels: 482.00, 555.80

Support Levels: 362.80, 330.46