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NEWS :Wall Street rallies on ceasefire news and dialing down of Fed cut notions

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Wall Street rallies on ceasefire news and dialing down of Fed cut notions

  • DJIA, added a further 117 points, or 0.44%, to 26,717.
  • S&P 500 index was higher and added 23 points.
  • The Nasdaq Composite added 85 points higher, or 1.06%, at 8,091.

Following its best June since 1938, the Dow Jones Industrial Average, DJIA, added a further 117 points, or 0.44%, to 26,717 on Monday as investors cheered the likelihood of a trade deal between China and the US and even started to dial down the notion of Fed rate cuts. Similarly, the S&P 500 index was higher and added 23 points, at 2,964, touching a new intraday high at 2,977.86, when it had risen as much as 36.1 points, or 1.2%. The Nasdaq Composite added 85 points higher, or 1.06%, at 8,091.

US data beats expectations

As for data, the U.S., June US ISM was stronger than expected at 51.7 (mkt: 51.0) and ahead of the Nonfarm Payrolls at the end of this week, an especially positive from the data came in the employment component which had improved (54.5 vs 53.7).

“Of the 18 industries surveyed, 12 showed expansion. Respondents frequently cited tariffs as an issue, noting havoc with supply chains and how they were affecting planning and forecasting. Mexican tariffs, which haven’t gone ahead, were also cited. With talks now back on with China and the Mexican issues resolved, there’s a chance sentiment improves from here, but new orders suggest activity may not (at least in the near term),” analysts at ANZ Bank explained.

DJIA levels

As per the charts, the DJIA rallied out of a consolidation phase where it had been previously glued to the pivot following a drift down away from the 3rd Oct 2018 highs. 26907 were the June highs, so the index fell just shy of there until it pulled back to end at the 21 Hull-Moving Average. A subsequent break there opens risk to 26500, the prior sideways consolidation level above the 61.8% Fibo retracement level of April to June swing highs and lows. On the upside, bulls can target a break to said Oct 2018 highs.

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