U.S. markets were choppy throughout the session amid ongoing tariff tiffs and trade wars.
However, a late day rally ahead of the close came on reports President Trump had got concessions from the EU to avoid a trade war.
It appears the Europeans have agreed to work on importing more U.S. LNG and soybeans, lowering industrial tariffs and aligning regulatory standards on medical products.
The major indexes finished at session highs with volatility closing at a session low.
The Nasdaq jumped 1.2% after holding positive territory for much of the session while testing an an all-time high of 7,933.
The close above the 7,900 level keeps fresh resistance at 8,000 in focus.
The S&P 500 was up 0.9% following a tight trading range with the high reaching 2,848. Fresh resistance at 2,850 held with a move above this level getting additional hurdles and all-time highs up to 2,870-2,875 in play.
The Dow rallied 0.7% despite trading in negative territory throughout much of the session while tapping a low 25,113.
The index held fresh support at 25,200 before the late day surge to 25,432 and close above the 25,400 level.
The Russell 2000 climbed 0.3% after trading in a 10-point range with the closing high reaching 1,685.
Lower resistance at 1,685-1,690 held with a move above the latter signaling renewed strength for another run past 1,700 and lifetime highs.
Industrials paced sector strength after soaring 1.5% while Health Care and Technology advanced 1.3%.
Real Estate was higher by 1%. Energy, Consumer Staples, and Materials were all up 0.8%.
There were no sector laggards.
President Donald Trump’s proposed tariffs have affected companies’ discussions on quarterly earnings calls.
Tariffs have been discussed in some form on over 40% of the 146 S&P 500 companies that have already reported quarterly results this season.
The impact appears to be heavily tilted toward the industrial industry, as new U.S. tariffs on steel and aluminum, for example, seem to be sending shock waves throughout the economy with mixed effect.
Most discussions of tariffs are critical, though some companies say they are seeing benefits.
Global Economy – European markets closed mostly in the red and ahead of the meeting between President Trump and the President of the European Commission to discuss tariffs on European cars, foreign and security policy, counter-terrorism, energy security and economic growth.
Germany’s DAX 30 sank 0.9% and UK’s FTSE 100 was declined 0.7%.
The Stoxx 600 Europe was off 0.3% and France’s CAC 40 slipped 0.1%. The Belgium20 added a point, or 0.04%.
The German July IFO business climate was down 0.1 to 101.7, stronger than expectations forma drop of 0.3 to 101.5.
The Eurozone June M3 money supply rose 4.4% year-over-year, topping forecasts of 4%.
UK July CBI retailing reported sales sank 12 to 20, but stronger than estimates for a decline of 17 to 15.
Asian markets settled mixed. Hong Kong’s Hang Seng rallied 0.9% and Japan’s Nikkei gained 0.5%.
South Korea’s Kospi and Australia’s S&P/ASX 200 were down 0.3%. China’s Shanghai slipped a point, or 0.04%.
Australian Consumer Prices rose by 0.4% in the second quarter and were up 2.1% from a year earlier, topping expectations of 0.5% and 2.2%, respectively.
MBA Mortgage Applications fell 0.2% along with a 1% dip in the purchase index and 0.9% rise in the refinancing index for the week ending July 20th. The average 30-year fixed mortgage rate was unchanged at 4.77%.
New Home Sales declined 5.3% to 631,000 in June, below forecasts of 668,000 and the lowest since October. The months’ supply of homes rose to 5.7 million from 5.3 million.
The median sales price declined 2.5% to $302,100 following the 1.6% June drop to $309,700. Prices are down 4.2% year-over-year with sales declining in all four regions.
Market Sentiment – The iShares 20+ Year Treasury Bond ETF (TLT) fell for the 6th time in 8 sessions despite testing an intraday high of $120.26.
Upper resistance at $119.75-$120 and the 50-day moving average held with additional hurdles at $120.50-$120.75 and the 200-day moving average.
Upper support at $119.50-$119.25 was breached on the late day fade to $119.26.
A move below $119 would be a continued bearish signal for lower lows.
Market Analysis – The Russell 3000 Index ($RUA) showed strength for a 3rd-straight session with Wednesday’s peak reaching 1,689.
January resistance at 1,680-1,685 was cleared with a move above 1,690 getting 1,695-1,700 and fresh all-time highs in play.
Rising support is at 1,680-1,675. A move below 1,670 would be a slightly bearish development and signal a possible near-term top.
RSI is back in an uptrend with June resistance near the 70 area.
A move above this level would signal continued strength and possible breakout territory.
Support is at 65-60 with a move below the latter being a warning signal for additional weakness.
The Industrials Select Sector Spider (XLI) was up for the 2nd-straight session after reaching an intraday peak of $75.42. Fresh resistance at $75.50-$75.75 held with continued closes above $76 signaling renewed momentum.
The break out of the tight trading range over the past six sessions was has current support at $74.75-$74.50. A close below $74-$73.75 and the 50/200-day moving averages would be a slightly bearish development.
RSI is trending higher with resistance at 65. Continued closes above the 70 level would be a more bullish development and signal renewed strength.
Support is at 60-55 with a move below 50 and a level that held throughout June signaling additional weakness.
All the best,
Roger Scott