Wall Street Close: Volcker rule relaxation sends financials higher in a positive session for US indices

• The Dow outperforms rising 1.18% rising just shy of 300 points.
• The S&P 500 rose 1.14% and the Nasdaq jumps 1.09%.
• The VIX moved 6% lower toward the psychological 30 support level.

The major world bourses have bounced back on Thursday from Wednesday’s decline. One of the big stories of the session was the potential easing of financial rules (Volcker rule). This lead financials to outperform particularly in the Dow. The Volcker Rule is apart of the Dodd-Frank bill enacted in 2010 following the meltdown of during the financial crisis back in 2008. It was enacted to crack down on risky behaviour by the worlds biggest banking firms. It was named after former Federal Reserve chair Paul Volcker, who sadly passed away in December. It is estimated the relaxing of this legislation could potentially free up as much as USD 40 billion for the big banks.

Goldman Sachs, JP Morgan and Bank of America were all trading over 2% higher at the time of writing.

In terms of data in the session, US GDP was confirmed at -0.5% for Q1. Initial Jobless Claims came in slightly above the consensus estimates of 1.300mln at 1,480mln but the previous reading was revised higher to 1,540mln from 1.508mln. On the plus side, core durable goods orders picked up by 4% vs the expectations of 2.5%. 

Trump also tweeted today saying:

The number of ChinaVirus cases goes up, because of GREAT TESTING, while the number of deaths (mortality rate), goes way down. The Fake News doesn’t like telling you that!

This tweet might not do much for international relations but he is doing his best to look on the bright side as the US still struggles to deal with the COVID-19 pandemic. 

Most of the main troubled states once again reported a rise in case numbers. White House Economic Advisor Kudlow reiterated that the US economy will not be closed down again. Although he did go on to say that hotpots could lead to shutdowns in certain places.

S&P 500 4-hour chart

The S&P 500 has broken back into the previous consolidation zone bring hope that the bull trend is back on. The 3K level has been successfully defended for now as the bulls stepped in way ahead of the psychological number. Now the biggest stumbling block is the red resistance zone at 3115.75. If this level is taken out then the probability of the highs being tested is remarkably higher. 

The price found support at the 55 Exponential Moving Average and now there is the possibility that the 200 Simple Moving Average could be tested again. The Relative Strength Index is now wrestling with the 50 mid-point and the MACD looks like the histogram might cross over. The signal lines are about to crossover to the upside but they still need to break the zero line to indicate the bull trend is going to continue. 

Additional levels