Yesterday’s data on the US consumer price index inspired investors’ optimism. The market’s expectations were gloomier.
Moreover, the stock market was supported by the producer price index released a day before, since the index did not show the expected high level of price pressure.
Additionally, support is provided by substantial profits of major US banks such as JPMorgan, Wells Fargo, Goldman Sachs, Citigroup.
Financial markets live by their inconstancy, which creates the volatility much needed by traders. The paradigm established a month earlier, according to which the year 2025 would be extremely conservative in terms of monetary policy easing, has been questioned. A sustainable economy, sticky inflation and comments from Federal Reserve policymakers previously reinforced concerns that the central bank would cut rates less aggressively than expected at the end of last summer.
The inflation data release led to increased expectations of further Fed rate cutting this year, as well as to the increased chances of a rate cut of at least 25 basis points at the Fed's meeting in June.
The rising stock market is also supported by the long awaited phased agreement to end the war in the Gaza Strip after 15 months of conflict.
At the same time, concerns remain about possible tariffs from the new administration of US President-elect Donald Trump, which could spur a new round of inflationary pressure.
On the NYSE, rising stocks outnumbered falling ones in the ratio of 5.49 to 1. The Nasdaq’s ratio was 3.19 to 1.
The S&P 500 Index set 20 new 52-week highs and nine new lows, while the Nasdaq Composite Index set 60 new highs and 92 new lows.
From the technical point of view, the S&P 500 index can expect a correction to the support level of 5920, from which it is likely to continue its strengthening.
The overall recommendation is to buy S&P 500 from the support level of 5920.
Profits should be taken at the level of 6050. A Stop loss could be set at the level of 5800.
The volume of the opened position should be set in such a way that the value of a possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.
This content is for informational purposes only and is not intended to be investing advice.
