July 30, 2020

U.S. Jobless Claims, Apple, Amazon, Facebook In Focus; Fed Vows Additional Support

U.S. Jobless Claims, Apple, Amazon, Facebook In Focus; Fed Vows Additional Support

The Dow Jones futures are trading lower as investors are concerned about the continuous spread of coronavirus. The tone of caution is likely to be the dominant force among investors as they continue to digest the Federal Reserve’s decision. The Fed kept the interest rates unchanged, something that was widely expected, and assured its continuous support. The Fed extended its U.S. dollar repo and swap lines until the end of March next year. The measure is designed to provide extra support for the economy and restore confidence among investors in the stock market and the U.S. economy. 

Coronavirus: Death Toll Hit’s Peak 

The coronavirus daily death toll in the U.S. touched peak level in more than two months, with California and Texas posting record numbers. The Covid-19 situation continues to worsen in Brazil, with more deaths and new cases on a daily basis. Global coronavirus cases are over 4.9million, and nearly 304K people have lost their lives to the virus. 

The Big Four: Apple, Amazon, Google And Facebook 

The four tech giants, Apple, Amazon, Facebook, and Google, were grilled on Capitol Hill yesterday as it is claimed that they hold too much power. The lawmakers told them that their influence and control on the digital industry adversely influence workers and small businesses. While Tim Cook claimed that Apple doesn’t dominate any markets. 

Alphabet, Facebook, and Amazon are likely to remain under the spotlight as investors are hoping to learn more about them after the U.S. market closes. Alphabet’s revenue is expected to fall 4%, while Facebook may see its revenue increase by 2%. 

Second Stimulus Bill 

The stock rally is also focused on Capitol Hill, and the hopes are that policymakers in Washington will be able to deliver a second stimulus package on time. The Federal Reserve’s chairman, Jerome Powell, gave a clear warning about this when he said we need to prepare for the worst and hope for the best. The comments were aimed at policymakers. 

U.S. Jobs and Labor Market 

The Dow Jones and S&P 500 futures, are also fearful that the U.S. economic data, especially the U.S. labor data, could be taking a turn for the worst. Last week, we saw the U.S. initial jobless claims soaring, and this worried many stock investors. The hope is that the worst is over for the U.S. labor economy, but with an increase in the initial jobless claims, many investors are cautious. 

The upcoming U.S. initial jobless claims data has tremendous importance among stock investors. If we hear last week’s message echoed —data taking a wrong turn—the stock market may really take some serious beating. However, if the U.S. initial and continuing jobless claims show strength, we could see some fresh capital deployed in the stock market that could push the S&P 500 and the Dow Jones higher. 

The global stock market recorded a positive day today. The HSI index led the gains, and it soared 0.72%, the Aussie ASX jumped 0.69%, and the Korean Kospi advanced 0.16%.

Dow Index And S&P500 Index: Market Breadth

The stock market’s breadth continues to confirm that bulls are losing ground. 47% of the Dow Jones stocks have traded above their 200-day moving average. 

The S&P 500 stocks are at a tug of war between bulls and bears. 54% 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 have started to consolidate on a daily time frame as traders are unsure about the next move. Having said this, the Dow price is still above the 50, 100, and 200-day moving averages on a daily time frame. Yesterday’s Dow Jones’s price action nearly challenged its 50-day moving average. Investors are worried that the coronavirus stock market rally could run into trouble if the Dow price falls below the 50-day moving average. 

The Dow futures on the weekly chart are keeping traders on their toes. The Dow Jones futures have bounced back up from their 50-week moving average. But the upward bounce doesn’t seem to have much strength, and this raises some alarm bells.

The S&P 500 index, which shows a better picture of the U.S. stock market, confirms that the S&P 500 price is still trading within last week’s highs and lows. The S&P 500 index price is holding on to its gains for this week, and it is trading above all the important 50, 100, and 200-week SMAs. 

Stock Market Rally 

The S&P500 index had a positive session yesterday as the index closed near its session high. The S&P 500 index closed higher with a gain of 1.24%. All the 11 sectors of the S&P 500 index closed in positive territory. Energy and financial sectors led the gains for the S&P 500 stocks.

The Dow Jones index jumped by 160 points yesterday and closed higher by 0.61%. 19 stocks soared, and 11 declined. Apple was the biggest gainer for the Dow Jones index. Boeing was the biggest drag for the index. 

The NASDAQ composite, a tech-savvy index, also advanced 1.24% yesterday.