Technology shares propelled U.S. stocks to all-time highs after Alphabet posted strong results and a jump in Gross Domestic Product failed to deter expectations that the Federal Reserve will cut Interest Rates this week. The Euro traded at a two-year low. The S&P 500 and Nasdaq Composite Indexes hit fresh records as Twitter and Google-parent Alphabet rallied after their sales beat estimates, though Amazon slid on lower-than-forecast earnings. The second-quarter GDP report came in the wake of Thursday’s European Central Bank meeting, where Mario Draghi failed to deliver the dovish signals investors sought. Stocks are hitting all-time highs based on the fact that the GDP report was better than expected and earnings continue to come in better than expected. But you also can see that as rates continue to stay low, people are looking to the Fed to cut.
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Corporate results have largely buoyed stocks this earnings season, though investors continued to watch for any hints of a slowdown in companies’ bottom lines. Central banks remain at the top of the agenda, with policy makers expected to boost stimulus at this week’s Fed meeting. The S&P 500 Index gained 0.7% to close at 3,026, the highest on record with the largest rise in more than three weeks. The Dow Jones Industrial Average climbed 0.2% to 27,192, while the Nasdaq Composite Index gained 1.1% to 8,330, the highest on record with the largest climb in more than five weeks. In Europe the Stoxx Europe 600 Index increased 0.3% to 390.73.
Here is a summary of the main changes in F.X Markets:
The Bloomberg Dollar Spot Index gained 0.2% to 1,202.61, the highest in more than five weeks, on the day after comments from White House adviser Larry Kudlow on CNBC that the U.S. has ruled out plans to intervene in foreign-exchange markets.
The Japanese Yen decreased 0.1% to 108.71 per dollar, the weakest in more than two weeks.
The Euro declined 0.2% to $1.1124, the weakest in more than two years.
The Turkish lira advanced 0.3% to 5.6775 per dollar, the strongest in a week on the biggest gain in more than a week.
The British Pound fell to new lows for the year closing at $1.2380
The yield on the benchmark 10-year Treasury note finished the day little changed after briefly spiking following the GDP report. There is nothing about this that would cause them to either not cut rates next week or to cut rates say by 50 basis points instead of 25. The yield on 10-year Treasuries dipped one basis point to 2.07%, while the yield on two-year Treasuries decreased less than one basis point to 1.86%. Finally in Europe, Germany’s 10-year yield declined one basis point to -0.38%.
Gold climbed 0.2% to $1,416.88 an ounce.
West Texas Intermediate crude increased 0.3% to $56.17 a barrel.
This morning on the Economic Front we have UK Mortgage Approvals, Net Lending to Individuals and Money Supply at 9.30 pm. The only U.S data of note is the Dallas Fed Manufacturing Index at 3.30 pm.
September S&P 500
Yet again the S&P say traders buy the dip as the market again closed at a new all-time high at 3026. I am still flat as my 3050/3100 target range gets closer. One worry is the negative divergence between the Dow and S&P as the Dow remains well below its July 16 high of 27398 while the S&P Has made two new highs in the last 10 days. I am still flat the S&P and today I will raise my buy level to 3005/3015 with a 2998 tight stop.
I am still flat the Euro and given the fact that President Trump said on Friday after the markets closed that he is still concerned about a strong Dollar I will now raise my Euro buy level to 1.1070/1.1110 with a 1.1035 stop.
September Dollar Index
Late on Friday the Dollar traded higher to my 97.80 sell level. As I wanted to be flat over the weekend I covered this position at my revised 97.72 T/P level and I am now flat. Today I will again look to sell the Euro on any further rally to 97.95/98.35 with a 98.65 stop.
I am still flat the DAX and today I will raise my buy level to 12230/12290 with a 12165 tight stop. I still do not want to be short the market at this time.
The continuing falling in the Pound to new lows against the US Dollar saw the FTSE perform well on Friday. I am still flat and today I will raise my buy level to 7395/7435 with a 7360 stop.
Dow Rolling Contract
As mentioned in my S&P commentary the Dow is struggling despite the VIX falling 4.5% to close near the low of the year at 12.15. Also a worry is despite the new all-time highs for the S&P and NASDAQ, the McClellan Oscillator only closed barley in positive territory with a +6 print. However ahead of Wednesday’s FOMC Rate announcement I would expect any sell-off in the US Indices to be contained. Today I will raise my Dow buy level to 26900/27050 with a 26825 stop.
Just before the close the NASDAQ traded higher to my 8040 sell level before selling off to my revised 8020 T/P level in the after-hours trading and I am still flat. Today I will again look to sell the market from 8050/8100 with a 8135 stop.
No Change as I am still a seller on any rally higher to 174.60/175.00 with a 175.35 stop.
Gold Rolling Contract
I am still flat Gold as the market continues to find difficulty in breaking the key 1440/1450 resistance area. Today I will leave my 1397/1405 buy level unchanged with the same 1391 stop.
Silver Rolling Contract
No Change as I am still a small buyer on any dip lower to 15.85/16.25 with a 15.55 tight stop. If I am taken long I will have a T/P level at 16.35.