Wall Street closes substantially higher on upbeat data and easing geopolitical tensions

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  • DJIA and S&P 500 close at record highs.
  • Technology continues to outperform other major sectors.
  • Nasdaq finished the day 1% higher.

Major equity indexes started the day higher and preserved their momentum with both the Dow Jones Industrial Average and the S&P 500 indexes closing the day at record highs.

Earlier today, the data from the U.S. showed that initial jobless claims fell to its lowest level since 1969 and the business activity in the manufacturing sector in the Philadelpiha region expanded at a more robust pace in September than it did in August. Furthermore, after recording contractions for four straight months, existing-home sales stayed unchanged in August and helped the S&P 500 Real Estate Index closed 0.76% higher. 

In addition to easing trade war fears, Washington’s willingness to restart denuclearization talks with North Korea allowed the risk-on mood to dominate the markets on Thursday. The risk-sensitive S&P 500 Information Technology Index added 1.17% to become the best performing sector of the day. 

Commenting on today’s market action, “it has a lot to with the ebbs and flows of the headlines coming out of Washington. The macro issue of the day is risk-on trade, risk-off trade,” Matthew Keator, partner in the Keator Group, a wealth management firm in Lenox, Massachusetts, told Reuters.

“Corporate cashflow is at a record high, unemployment is low, regulatory reform and tax reform have certainly provided winds to the sails of the market,” Keator added.

On the other hand, crude oil reversed its course after President Trump called upon the OPEC to bring down oil prices and the S&P 500 Energy Index fell 0.06% to become the only sector recording losses on the day.

When the closing bell rang on Thursday, the Dow Jones Industrial Average was up 259.27 points, or 0.98, at 26,664.03. The S&P gained 23.26 points, or 0.8%, to 2,931.21 and the Nasdaq Composite rose 79.61 points, or 1%, to 8,029.65.

DJIA technical outlook via FXStreet Chief Analyst Valeria Bednarik

The DJIA trades not far from an intraday all-time high of 26,695, and the strong upward momentum persists according to technical readings in the daily chart, although the RSI indicator entered overbought territory, currently at 74. The Momentum indicator in the mentioned chart has further room to advance, still far from August peak, while the index is currently developing far above a strongly bullish 20 SMA, now some 600 points below the current level.

In the 4 hours chart, technical indicators are giving signs of upward exhaustion in extreme overbought levels, while the 20 SMA accelerated its advance below the current level, somehow suggesting that a possible downward move could be just corrective, as bulls took over the index.

Support levels: 26,617 – 26,572 – 26,516.

Resistance levels: 26,695 – 26,740 – 26,785.

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