- Rising bond yields lift financials higher on Monday.
- Lower oil prices continue to weigh on energy.
- Latest on trade relations help the market sentiment improve.
After starting the day in the negative territory, major equity indexes painted a mixed picture on the first trading day of the week and struggled to make a decisive move in either direction amid varying performances of different sectors.
Heightened expectations of a positive outcome from Wednesday’s Trump – Juncker meeting, at which they are expected to talk about the trade relations between the U.S. and the EU, and optimistic comments from Mexico regarding their trade negotiations, helped the risk appetite crawl back to markets. The CBOE Volatility Index, Wall Street’s fear gauge, lost around 2% to reflect the improved sentiment.
“One of the reasons we’re holding tight is rumors that there will be progress made on trade agreements with Europe, as well as the new comments from the president of Mexico,” Robert Phipps, a director at Per Stirling Capital Management in Austin, Texas, told Reuters.
Meanwhile, the 10-year US T-bond yield added more than 2% on the day to help financials outperform other major sectors. The S&P 500 Financials Index (SPSY) added 1.3% on the day. On the other hand, the barrel of WTI lost nearly 40 cents to settle at $67.90 on the day and dragged the S&P 500 Energy Index (SPNY) 0.4% lower.
After the closing bell, tech-giant Alphabet Inc (Google) reported higher-than-expected earnings for the second quarter on the back of robust online advertisement income. “Revenue jumped to $32.66 billion from $26.01 billion. Analysts on average had expected revenue of $32.17 billion and earnings of $9.52 per share,” Reuters reported. This data is likely to provide a strong boost to the tech-heavy Nasdaq Composite Index on Tuesday.
At the end of the day, the Dow Jones Industrial Average lost 12.97 points, or 0.05%, to 25,045.15, the S&P 500 was up 5.15 points, or 0.18%, at 2,806.98 and the Nasdaq Composite gained 21.68 points, or 0.28%, to 7,841.87.
DJIA Technical outlook (via FXStreet Chief Analyst Valeria Bednarik)
“The Dow remained confined to Friday’s range, and the daily chart has suffered little changes, although the upward momentum keeps fading, as despite developing above all of its moving averages, technical indicators continue easing in positive levels, at their lowest in a week.”
“Shorter term, and according to the 4 hours chart, sellers surged on approaches to a mild bearish 20 SMA, while technical indicators are retreating modestly from their midlines, without strength enough to confirm further slides ahead. A break below the mentioned 25,000 figure could exacerbate selling interest, favoring a slide toward last week’s low at 24,925.”
According to the analyst, supports for the index could be seen at 24,990, 24,925, and 24,878 while resistances align at 25,061, 25,103, and 25,157.
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