U.S. markets snapped out of a 4-session funk while closing mostly higher on chatter of a trade truce with China and slightly better-than-expected economic news.
China’s President Xi is expected to present President Trump with terms willing to settle the contentious trade fight between the two nations.
The news was shot down after White House advisor Larry Kudlow said that no preconditions were set ahead of Trump’s meeting with Xi And added the U.S. could move forward with additional tariffs.
In any event, volatility settled slightly lower heading into this weekend G20 summit and ahead of the last trading day of for June.
The Russell 2000 outperformed after surging 1.9% while closing on its session peak of 1,546.
Upper resistance at 1,535-1,550 held on the close back above the 200/50-day moving averages.
The Nasdaq gained 0.7% following the intraday run to 7,976.
Current and lower resistance at 8,000-8,100 held for the 2nd-straight session with a close above the latter getting 8,150-8,200 and all-time highs in play.
The S&P 500 added 0.4% after testing an intraday high of 2,929.
Near-term and lower resistance at 2,925-2,950 was cleared but held by less than a tenth-point with a close above the latter signaling additional momentum.
The Dow extended its losing streak to 3-straight sessions after dipping 10 points, or 0.04%, despite trading to a 2nd-half high of 26,607. Near-term and lower resistance at 26,600-26,850 held with the all-time high at 26,951.
Financials and Real Estate were the strongest sectors after jumping 1% and 0.9%, respectively.
Energy was the only sector that settled in the red after giving back 0.7%.
Global Economy – European markets closed mixed on slightly weaker-than-expected economic news.
The Belgium20 rose 0.5% and UK’s FTSE 100 was up 0.2%. The Stoxx 600 was up less than a point. Germany’s DAX 30 was down 0.2% and France’s CAC 40 slipped 0.1%
Germany’s ifo business confidence index dropped to 97.4 in June, from 97.9 in May, missing forecasts of 97.5.
Asian markets closed higher across the board following reports of a tentative truce between the U.S. and China on trade.
Hong Kong’s Hang Seng soared 1.4% and Japan’s Nikkei rallied 1.2%. China’s Shanghai advanced 0.7% and South Korea’s Kospi was higher by 0.6%. Australia’s S&P/ASX 200 added 0.4%.
Initial Jobless Claims were up 10,000 to 227,000, topping forecasts of 218,000. The 4-week moving average rose to 221,250 versus 219,000 the prior week.
Continuing claims increased 22,000 to 1,688,000 following the 34,000 decline to 1,666,000 the prior week.
Q1 GDP growth was left unrevised at the 3.1% clip in the second look and 3.2% in the Advance report, both matching forecasts. Consumption was bumped down to a 0.9% pace from 1.3% previously.
Business fixed investment was boosted to 3% versus 1% while government spending was revised up to 2.8% from 2.5%. Inventories contributed $26 billion, down from the prior $28.7 billion contribution.
Net exports contributed $50.7 billion, down from $52.1 billion. The chain price index was nudged up to 0.9% versus 0.8%, with the core rate now at 1.2% versus 1%.
May Pending Home Sales Index was up 1.1% versus estimates for a gain of 0.6%.
On a 12-month basis, sales fell to a -0.8% year-over-year clip versus 0.4% last month, which had represented the first increase in the growth rate in a year.
Regionally, pending sales were higher in the Midwest (3.6%), the Northeast (3.5%) and the South (0.1%), but were lower in the West (-1.8%).
Kansas City Fed Manufacturing Index for June checked in at 4 versus forecasts of 3.
Corporate Profits after-tax were up 2.3% for the year.
Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) rebounded after trading to a 2nd half high of $133.09.
Prior and lower resistance at $133-$133.50 was breached but held with the recent 52-week peak a penny above the latter.
Support remains at $132-$131.50 with a move below the latter getting $130.50-$130 in play.
Market Analysis – The Russell 3000 Index ($RUA) snapped a 4-session losing streak after reaching an intraday peak of 1,721. Lower resistance from earlier this month and mid-April at 1,725-1,750 was challenged but held.
The late April and all-time high is at 1,743 with continued closes above 1,750 getting 1,775-1,800 in focus.
Near-term and major support is at 1,700 and the 50-day moving average and a level that held for 6 sessions earlier this month.
A close below these levels reopens risk towards 1,675-1,650 and the 200-day moving average.
RSI is back in an uptrend with resistance at 60. A close above this level would signal additional strength towards 65-70 with the latter representing the high throughout April and earlier this month.
Support is at 55-50 with a close below the latter being a bearish signal for additional weakness.
The iShares PHLX Semiconductor ETF (SOXX) closed in positive territory for the 2nd-straight session after tapping a high of $199.15. Lowered resistance at $199-$199.50 was cleared but held.
Continued closes above the $200 level would be a bullish signal for additional strength towards $202.50-$205, depending on momentum.
Current support is at $196.50-$196.
A close below the latter reopens risk towards $194.50-$194 and the 50-day moving average.
RSI is in an uptrend with resistance at 65-70 and the latter representing the early May top. Support is at 55-50 if 60 fails to hold.
All the best,