July 28, 2020

Stock Market Awaits Mega-Tech Earnings And Fed Decision

Stock Market Awaits Mega-Tech Earnings And Fed Decision

The Dow Jones futures are trading higher as investors speculate about the Federal Reserve’s next possible action. Traders are a little hesitant to place any bigger bets as the Fed begin their two-day meeting today. The hope is that the Fed will continue their fight against coronavirus via its monetary policy. 

The coronavirus infection rate continues to decline in California, Florida, and Arizona. Investors are cheering this news but are still not ready to fully load their portfolios with risky assets, such as stocks. The high-frequency economic numbers out of the US has stopped them from backing stocks, but the hope is that the monetary and fiscal policy will continue to push the stock market higher. 

The S&P 500 companies confirm that the earnings season so far hasn’t been too bad. The S&P index has received a thumbs up from most companies in terms of their earnings forecast. US companies believe that the worst is over for the US economy. More companies have raised their forecast.  

The stock rally is dependent on the outcome of the Federal Reserve meeting. Policymakers in Washington still haven’t delivered another stimulus package, and it seems likely that it will be further delayed. Now, there is more pressure on the Fed to support the stock market; otherwise, stocks could crash. 

The Dow Jones and S&P 500 futures aren’t likely to unshackle themselves from the current chaos experienced by the airline stocks. The entire tourist sector has once again come under pressure due to Spain’s worsening Covid-19 situation. US airlines, cruise operators, and hotel stocks have also felt the pain. It is essential to focus on the opportunity at hand, which is that most travel stock is edging closer to coronavirus stock market crash levels. The fact is that the worst is behind us concerning coronavirus, and the current sell-off could be the opportunity that investors have been waiting for.  

The US stock market may get an upward push if US consumer data beats the forecast. The forecast is 94, while the previous reading came in at 98.1. This is the last piece of valuable information that the Federal reserve will receive before their FOMC rate decision, which is due tomorrow. 

The global stock market recorded mostly a positive day. The Japanese Nikkei index closed higher by 0.02%. The Shanghai index soared by 0.60%, while the HSI index advanced 0.53%. 

Earnings Alert

In terms of stock earnings, here are some of the companies which are likely to be in focus this week:

  • Apple, Amazon.com, Alphabet, Samsung 
  • Chevron, Rio Tinto, Caterpillar, 
  • Barclays and Credit Suisse. 

Dow Index And S&P500 Index: Market Breadth

The stock market’s breadth confirms that the bulls have lost a lot of ground, but the bulls have not yet lost the control. 50% of the Dow Jones stocks have traded above their 200-day moving average. 

The S&P 500 stocks do display better bull strength. 53% of the shares are trading above their 200-day moving average. 

Dow Jones And S&P 500 Futures Today

The Dow Jones futures are trading higher by 50 points. 

The Dow Jones futures are still above the 50, 100, and 200-day moving averages on a daily time frame. Yesterday’s price action confirms that investors believe in the coronavirus stock market rally. The 50-day moving average has firmly crossed above the 200-day moving average, which is positive. 

The Dow futures on the weekly chart are trading within the previous week’s highs and lows. The DJ30 index price must stay above the 50, 100, and 200-week smooth moving average to continue this bull trend. 

The S&P 500 index is a better representation of the US stock market by maintaining its upward trend. The S&P 500 index price is holding on to its gains, but it is trading below last week’s high. For this bull trend to continue, we need the S&P 500 to break above the previous week’s high of $3,284. 

Stock Market Rally 

 

The S&P500 index had a reasonable session yesterday as the index closed near a session high. The trading volume for the S&P 500 index was on the lighter side compared to the recent trend. The SPX index closed recorded gains of 0.74%, and only two sectors out of eleven closed in negative territory. 

The Dow Jones index soared 114 points yesterday and closed higher by 0.43%. Seventeen stocks soared, and thirteen declined. Apple was the biggest gainer for the Dow Jones index while Boeing kept a lid on an upside move. 

The NASDAQ composite, a tech-savvy index, also advanced 1.82% yesterday.