U.S. markets rebounded on Thursday to snap 2-session slide despite a spike in crude oil prices, which was triggered after two tankers were damaged in a suspected attack in the Gulf of Oman.
The major indexes shrugged off the news after holding positive territory throughout the session while finishing just off the session highs and pushing prior resistance levels.
Volatility stayed relaxed and is still giving a neutral reading as the index remains trapped between its 50-day and 200-day moving averages.
The Russell 2000 surged 1.1% following the 2nd-half push to 1,536.
Lower and major resistance at 1,525-1,540 was cleared and held with more important hurdles at 1,545-1,560 and the 200/50-day moving averages.
The Nasdaq rallied 0.6% after reaching a morning peak of 7,848.
Near-term resistance at 7,850-7,900 and the 50-day moving average was challenged but held with a close above the latter being a more bullish signal.
The S&P 500 gained 0.4% while trading to a high of 2,895.
Lower resistance at 2,900-2,925 held for the 4th-straight session on the 5th-straight close above the 50-day moving average.
The Dow also added 0.4% following the intraday run to 26,156.
Near-term and lower resistance at 26,250-26,500 held on the 4th-straight close above the 50-day moving average.
Energy and Communication Services paced sector leaders after advancing 1.2% and 1.1%, respectively. Consumer Discretionary was higher by 0.9%
Healthcare was the only sector laggard after slipping 0.1%.
Global Economy – European markets were mostly higher as Boris Johnson confirmed his status as favorite to succeed U.K. Prime Minister Theresa May.
Germany’s DAX 30 rose 0.4% and the Stoxx 600 added 0.2%. France’s CAC 40 and UK’s FTSE 100 added a point, or 0.01%. The Belgium20 fell 0.3%.
Asian markets closed mixed as protests in Hong Kong continued.
Japan’s Nikkei fell 0.5% and South Korea’s Kospi was off 0.3%.
Hong Kong’s Hang Seng dipped 0.1%. China’s Shanghai nudged up 0.1% while Australia’s S&P/ASX 200 was up less than a point.
Initial Jobless Claims climbed 3,000 to 222,000, versus forecasts of 216,000, and representing the highest level since the May 4th week. The 4-week moving average rose to 217,750 from 215,250.
Continuing claims edged up 2,000 to 1,695,000 following the 31,000 increase to 1,693,000 the previous week.
Import Prices slipped -0.3% in May, while Export Prices were down -0.2%. The 0.2% increase in April import prices was revised down to 0.1%, and the 0.2% gain in export prices was bumped to 0.1%.
Compared to last May, import prices have fallen to -1.5% year-over-year versus -0.3%, while export prices dropped to -0.7% year-over-year from 0.2%. For import prices, May petroleum prices declined -0.9%.
Excluding petroleum, import prices slipped -0.3% from -0.5%.
Industrial supply prices fell -1% from the prior 0.7% gain. Import prices with China dipped -0.1% from -0.2%, and were -1% lower with Canada from 2.1%.
For exports, agriculture prices dropped -1% from -1.5%, and were -0.2% ex-ag from 0.2%.
Market Sentiment – Next week’s FOMC meeting shouldn’t result in any rate moves, but the policy statement should be a little more dovish versus that from May 1st.
Meanwhile, the futures market is giving only slim chance for a 25 basis-point cut next Wednesday, but shows over 80% risk for an easing at the July 30th-31st meeting.
Analysts do expect the FOMC to shift its language, however, removing the word “patient” and likely replacing it with something akin to Powell’s June 4th remark where he said the Fed will be “closely monitoring the implications of these developments” on trade and other matters.
The iShares 20+ Year Treasury Bond ETF (TLT) extended its winning streak to 3-straight sessions following Thursday’s run to $131.25. Lower resistance at $131-$131.50 was cleared and held with additional hurdles at $132-$132.50.
The recent 52-week from earlier this month is at $132.58.
Support remains at $130.50-$130.
Market Analysis – The Invesco QQQ Trust (QQQ) was up for the 7th time in 8 sessions after trading to an intraday high of $183.87. Near-term and lower resistance at $183.50-$184 and the 50-day moving average was cleared but held.
Continued closes above the $185 level would be a more bullish signal for a possible run towards $187-$187.50 over the near-term.
Current support is at $183-$182.50. A move below the latter would be a slightly bearish development with risk towards $180.50-$180.
RSI is back in a slight uptrend with resistance at 60.
Continued closes above this level would signal additional strength towards 65-70 with the latter representing the early May high.
Support is at 50 with a close below this level signaling additional weakness towards 45-40.
The Industrials Select Sector Spider (XLI) also closed in positive territory for the 7th time in 8 sessions after reaching an intraday peak of $75.76.
Lower resistance at $75.50-$76 was cleared and held.
Continued closes above the latter and the 50-day moving average would be a more bullish signal for renewed strength.
Near-term support is at $75-$74.50.
A close below $74 would be a slightly bearish development with risk towards $73.50-$73 and the 200-day moving average.
RSI has been flatlining with support at 50. There is risk towards 45-40 on a move below this level.
Resistance is at 55-60. A move above the latter would be a bullish signal for additionL strength towards 65-70 with the latter representing the April high.
All the best,