US stock futures are heading towards a losing week as traders are concerned about the Fed’s hawkish monetary policy. Many believe that fundamentals are strong and investors are only overly reacting to the Fed’s statement that we had this week. For them taper tantrum was inevitable and there is no doubt that we are going to see many of these episodes every time the Fed talks about their hawkish monetary policy. Although, there is also a belief among investors that the Fed may be becoming overly hawkish and the economic growth is still not strong enough to see any hawkish policy measures. For instance, yesterday, we saw the US Weekly Jobless Claims increasing and missing the estimates.
However, the fact of the matter is, that this market is addicted to stimulus measures and traders do not like the idea of stimulus support withdrawing.
The Asian stock market traded mostly higher on Friday. The Nikkei index advanced 0.01%. The HSI index increased by 0.52%, while the ASX index gained 0.52%. The Shanghai index dropped by 0.47%.
Dow Jones and S&P 500: Market Breadth
The Dow Jones’ market breadth gained further momentum yesterday. 77% of the Dow Jones stocks traded above their 200-day moving average.
The S&P 500 stock breadth also displayed strength yesterday. 80% of the shares traded above their 200-day moving average.
Dow Jones Futures Today
The Dow Jones futures are trading lower today. In terms of economic data, investors will be looking at the Fed Chair’s testimony and will try to find out more about the Fed’s stance about their monetary policy. Some of the prominent economic numbers for the next week are the Flash Manufacturing PMI numbers and the bar is set high once again.
The Dow Jones futures are set to close the week in negative territory which shows that investors are pulling money out of industrial stocks. This will be the second consecutive week of losses for the Dow Jones and on the daily time frame, the price has dropped below the 50-day SMA, which means that bulls are no longer in full control of the price. Currently, the price is in battle with the 100-day SMA and the hope is that this could be the reversal point for the price action as the RSI is showing that prices are oversold. Bulls still believe that they have the chance to reverse the recent losses, because the Dow Jones’s price is trading well below above the 200-day SMA on the daily time frame.
The near term support is at 3,3356, while the resistance is at 34,201.
Stock Market Rally
The S&P 500 stock index closed lower yesterday; the index declined by 0.04%. The banking sector led the index lower and 6 out of 11 sectors closed lower.
The Dow index declined yesterday; the Dow stocks moved the index lower by 0.62%. 20 shares advanced, while 10 shares closed lower.
The NASDAQ composite, a tech-savvy index, closed sharply higher by 0.87% yesterday.
S&P 500 Leaders and Laggards: Enphase and Occidental Petroleum
Enphase Energy stock contributed the biggest gain, soaring 6.55%. Occidental Petroleum stock was the largest drag; it fell by 7.59%. The S&P 500 stock index is up 1.74% so far this year.
Dow Jones Leaders and Laggards: Microsoft and Caterpillar
Microsoft provided the biggest help for the Dow Jones; it advanced by 1.36%, while Caterpillar was the largest decliner, it fell by 3.55%.
The United States has been successful in controlling the outbreak of cases due to an effective vaccination programme. According to the CDC, as of Tuesday, approximately 43.7% of Americans had been fully vaccinated, with 52.5% having received at least one dose. Since January, the number of new cases reported per day has decreased drastically, with 10,010 new cases and 205 new deaths reported on June 14.