Investors are wondering what direction the market is heading this week after the S&P 500 managed its best weekly gain in 45 years, primarily because the Federal Reserve threw more money in the economy. Futures are currently trading down, but S&P 500 continues the upward correction trend and is trading near 2750.0. Last week, investors focused on macroeconomic statistics. The basic consumer price index for March reached the negative zone and amounted to –0.1% against expectations of 0.1%.
The yield on 10-year US Treasury bonds decreased slightly and amounted to 0.72%. The US Federal Reserve has announced the next package of support measures for $2.2 trillion to support small and medium-sized companies in all states, primarily to purchase bonds, the value of which has dropped to a minimum. Thus, the regulator seems to help business but continues to pump money into markets.
Goldman Sachs‘ strategists led by David Kostin said on a call that the worst of the market rout is behind us. A “previous near-term downside of 2000 [for the S&P 500] is no longer likely. Our year-end S&P 500 target remains 3000 (+8%),” says the Goldman Sachs team to clients on Monday.
There are two reasons for their optimism. “The combination of unprecedented policy support and a flattening viral curve have dramatically reduced downside risk for the US economy and financial markets and lifted the S&P 500 out of the bear market territory,” said Kostin, whose gloomy stock prediction from last month came the day before a complete market meltdown.
“If the US does not experience a second surge in infections after the economy reopens, the ‘do whatever it takes’ stance of policymakers means the equity market is unlikely to make new lows,” said Kostin.
Morning Stock Market Report
Among the growth leaders are Gap +15.80% (NYSE: GPS), United Airlines +14.50% (NASDAQ: UAL), and Kohls +13.64% (NYSE: KSS). The decrease leaders are Halliburton –6.17% (NYSE:HAL), Flowserve –5.39% (NYSE: FLS), and Nielsen –5.10% (NYSE: NLSN).
S&P futures are lower, down 28 to 29 points, as…
- The Federal Reserve’s Loretta Mester said the central bank isn’t done with the policy actions it can take to aid the economy through the coronavirus-related shutdown.
- The House and Senate appeared far apart on approving an additional $250 billion worth of aid for small business lending.
- The Fed’s Neel Kashkari said the domestic economy could be facing 18 months of rolling shutdowns unless a coronavirus vaccine is soon available.
- OPEC+ members agreed to cut oil output by 9.7 million barrels per day for May and June.
- Earnings season gets underway today with low expectations regarding numbers and outlooks.
European markets were unchanged as…
- Markets in France, Germany, Italy, Spain, and the UK were shut for the Easter holiday.
- British Prime Minister Boris Johnson was released from the intensive care unit of a London hospital to recover from coronavirus at his own home.
- New coronavirus infections in France, Germany, Italy, and Spain continued to ease versus peaks made in each country during late March/early April.
Asian markets fell as…
- China’s new coronavirus infections reached its highest level since March 5 (almost six weeks) due to infected travelers from abroad.
- Japanese markets declined as yen strength weighed on the earnings outlook for exporters.
- China releases vital economic data later this week in the form of exports and imports for March and first-quarter gross domestic product.
- Markets in Australia, Hong Kong, and New Zealand were all closed for the Easter holiday.
Support and resistance
The dynamics of the S&P index continues within the full upward channel. The price is in the middle of the range, and in the coming days, the likelihood of a decline is quite high. The global uptrend persists, as evidenced by the Alligator indicator, which holds a wide range of EMA fluctuations.
Resistance levels: 2800.0, 2935.0.
Support levels: 2690.0, 2620.0.