In This Article:
Volatility was the theme in the U.S. equity markets during the holiday-shortened week. Two out of three of the major indexes ended up posting 2.0% gains, however, it was the road traveled to get there that drew the most attention with the S&P 500 Index moving by more than 1.5% on three of the four trading days.
In the cash market, the benchmark S&P 500 Index settled at 2640.87, up 2.0%. It is now down 1.2% for the year. The blue chip Dow Jones Industrial Average closed at 24103.11, up 2.4%. It is down 2.5% this year. The tech-driven NASDAQ Composite finished at 7067.84, up 1.0%. In 2018, it is up 2.3%.
Forecast
We’re looking at the possibility of another volatile two-sided trade this week with bearish investors still concerned about trade wars and turmoil in the White House.
Bullish investors may have put the fear of a trade war behind them with the announcement that the U.S. and China will be sitting down to negotiate a compromise over a few of the key trade issues.
Additionally, the easing of tensions between the U.S. and North Korea may be another factor providing stability to the markets.
Bullish investors also believe that robust revenue and earnings growth as well as a growing economy will continue to underpin the markets.
The major reports in the U.S. this week include ISM Manufacturing PMI, ISM Non-Manufacturing PMI and Non-Farm Payrolls.
Several Federal Open Market Committee members are also scheduled to speak.
The tone of the week is likely to be determined by trade war fears, but the economic reports should cause periodic bouts of volatility.
Investors will also be watching the testimony of Facebook leader Mark Zuckerberg before Congress on Tuesday and the possibility of further attacks against Amazon by President Trump through his Twitter account.
These events may shake up the tech-driven NASDAQ Composite, but money may not leave the equities for safe haven assets. Instead, it could flow into more traditional stocks in the Dow Jones Industrial Average. Don’t be surprised at times if you see the Dow up and the NASDAQ down. I think there is a rotation taking place ahead of the start of earnings season later this month.
This article was originally posted on FX Empire