Hi, dear traders! Our analysts are ready to share their review and forecast of US financial markets. As expected, Wall Street clicked into gear on Thursday. Investors welcomed positive corporate reports which added to the overall optimism. Previously, investors were encouraged by the Fed’s minutes. Is the bull market around the corner?
Optimistic market sentiment propelled a rally in major stock indices. The Dow Jones closed 1.6% up. The Nasdaq gained 2.7%. The S&P 500 grew 2% to close at 4,057. The index eventually topped the level of 4,000. The pre-market today suggests further growth. Wall Street indices grew modestly by 0.3 – 1.2%. The S&P 500 is expected to trade in the corridor between 4,020 and 4,150.
Three key stock indices are poised to snap the protracted losing streak. The odds are that the S&P 500 will complete its 7-week losing streak. The Dow Jones is likely to stop its 8-week downtrend. As of today, both indices have grown almost 4% this week. The Nasdaq have regained 3.4 %. The indices are closing with the strongest weekly gains since mid-March. The catalyst for optimism is certainly the US Fed. In the minutes, the regulator indicated that it would take a break in aggressive monetary tightening in the autumn. Besides, according to the second estimate, the US GDP contracted 1.5% in the first quarter. Retail sales data revealed that consumer spending remained robust in the first quarter despite soaring inflation. Investors were pleased about financial reports from US top retailers such as Dollar Tree, Dollar General, and Macy's. Last week, the market took a hit by a decline in Walmart and Target.
Today clothing retailer GAP reported serious losses. In turn, its stock dropped 19% in the pre-market. Costco stock also went down in light of reported 2% losses.
Today, the stock market could fund support from high-tech stocks. Investors are reviving faith in the development of high-tech giants. Nvidia stock slumped 5% in the pre-market and regained losses later. Dell Technologies jumped 12.4% after the company reported upbeat quarterly corporate profits and revenue. GameShop stock surged by 67%, thus indicating a growing appetite for risk. Big-tech companies added 2 – 7.5% yesterday. The fundamental environment on Wall Street is positive. Investors are poised to resume buying after a protracted downtrend.
While the stock market is overwhelmed by hopes, the US dollar looks gloomy. Its index sharply fell to 101.43 for the first time since April 25. The index has lost 1.3% for the week, closing on Friday with the worst weekly losses since the first week of February. The index is closing in the red for the second week in a row. Today, it is trading at around 101.70, tending to extend a decline. The intraday corridor for today is seen between 101.30 and 101.90.
The US currency is weighed down by the prospects of a pause in rate hikes. Fresh stats does not scare investors as the data comes in line with expectations.
The PCE price index showed that inflation eased to 0.2% in April on month following a 0.9% increase in March. An annual rate also slowed down to 6.3% from the record high of 6.6% a month ago, matching the forecast.
Traders cheered better-than-expected data on personal spending. The actual reading rose 0.9% on month, surpassing the forecast of a 0.7% increase. It proves that consumers are still poised to spend money despite high consumer prices. They expanded spending on services, vehicles and spare parts, but cut spending on petrol and energy. We understand that fresh statistics do not benefit the US dollar. So, the greenback is set to close the week on a pessimistic note.
The Canadian dollar is certainly taking advantage of the greenback’s weakness. The USD/CAD pair eventually escaped from the flat market, having broken 1.2800 downwards. The currency pair is trading lower as the loonie is holding the upper hand. Today the pair is trading at about 1.2730, nearly 100 pips lower than the opening price on Monday and 30 pips lower than the opening price today.
