S&P 500; US Indexes Fundamental Daily Forecast – Rally: Return of Bulls or Knee-Jerk Reaction to News?
U.S. equity futures surged on Monday with the Dow posting triple-digit gains after Secretary of State Rex Tillerson and U.S. Secretary of Defense James Mattis stated that the current U.S. administration would continue to pursue diplomatic resolutions with North Korea.
In the cash market at 1500 GMT, the blue chip Dow Jones Industrial Average was trading 22009.96, up 151.64 or +0.69%, the benchmark S&P 500 Index was at 2467.06, up 25.74 or +1.05% and the tech-based NASDAQ Composite was up 78.77, or +1.26% at 6335.33.
The gains in the Dow were attributed to strong performances by Goldman Sachs and Apple. The financial and information technology sectors supported the strong rally by the S&P 500 Index. The NASDAQ Composite was helped by strong performances by Tesla, Amazon and Facebook.
The buying started early Sunday after The Wall Street Journal published commentary from Secretary of State Rex Tillerson and U.S. Secretary of Defense James Mattis stating that “the U.S. has no interest in regime change or accelerated reunification of Korea.”
Stocks were also supported by bullish GDP data from Japan, but gains may have been tempered by disappointing economic data from China.
The market was also helped by aggressive demand for higher risk assets with money flowing back into equities from investors selling safe-haven assets like the Japanese Yen and gold.
The rally also helped drive down demand for protection against a stock market meltdown with the CBOE Volatility Index (VIX) trading near 12.4, down about 20 percent.
Investors will be watching the close today to determine if the rally was fueled by aggressive buying or if it was only a relief rally in an over-valued market.
The stock market also received support from last Friday’s disappointing U.S. Consumer Inflation report. The weak number helped reduce the odds of a Fed rate hike later this year. Lower interest rates tend to be bullish news for stocks.
This article was originally posted on FX Empire
