U.S. markets traded higher on Tuesday with the Dow leading the way after setting another all-time high. The S&P 500 cleared near-term resistance in the process with Tech and the small-caps trying to build new bases of support following the recent pullbacks.
Oil has rallied over the past two weeks but fell 2% to close back below $50 per barrel.
Global Economy –European markets finished in the green after data showed rising economic growth in the eurozone. The FTSE 100 index gained 0.7% while the Stoxx Europe 600 advanced 0.6%. France’s CAC 40 index jumped 0.7% and Germany’s DAX 30 soared 1.1%.
The overall Eurozone manufacturing PMI came in at 56.6, and slightly below the 56.8 forecast. Eurozone Q2 GDP met expectations with quarter-over-quarter growth of 0.6% and a year-over-year increase of 2.1%.
U.K. house prices climbed by a monthly 0.3% in July. Compared with July last year, house prices grew by 2.9%.
Germany’s jobless claims rate dropped to 5.7% in July. Jobless claims fell by 9,000 in July, versus expectations of 5,500.
Asian markets also posted strong gains with Australia’s S&P/ASX 200 adding 0.9% and Hong Kong’s Hang Seng Index climbing 0.9%. South Korea’s Kospi index was up 0.8% while China’s Shanghai index advanced 0.6%. Japan’s Nikkei Stock Average was higher by 0.3%.
The China Caixin manufacturing PMI for July rose to 51.1, up from 50.4 in June, where it was expected to remain.
U.S. Economy-ISM manufacturing index slipped 1.5 points to 56.3 in July, versus a forecast of 56.4. Declines were broad-based as the employment component fell 2 points to 55.2 after jumping 3.7 points to 57.2 in June.
New orders dropped 3.1 points to 60.4 from 63.5. New export orders declined 2 points to 57.5 from 59.5. Prices paid climbed 7 points to 62 from 55.
Markit’s manufacturing PMI for July came in at 53.3, nearly in-line with a forecast of 53.2.
June Construction spending declined 1.3% in June, versus expectations for a rise of 0.4%.
Personal Income was unchanged in June, with spending up 0.1%.
Market Sentiment –The iShares 20+ Year Treasury Bond ETF (TLT) opened at $123.18 and tested a low of $123.16 with support upper support at $123-$122.50 holding.
The run to $124.71 intraday cleared upper resistance at $124-$124.50 and the 50-day moving average. Continued closes above $124.75-$125 would be a bullish development for a possible return to $126-$128.
Market Analysis-The iShares Russell 200 ETF (IWM) struggled for the fifth-straight session but closed higher to end a four session losing streak. The morning low reached $140.96 with upper support at $141 holding.
There is additional help at $140 and the 50-day moving average. Upper resistance at $142-$142.25 held on the late day push to $142.22.
The Dow Jones Transportation Average ($TRAN) has been in a nasty downtrend since the middle of July with today’s low tapping 9,124. Support at 9,125-9,100 and the 200-day moving average held with a move below the latter a continued bearish development. Resistance is at 9,250 and the 100-day moving average.
The divergence between the Dow and the Transports is a little troublesome as it could signal a pullback in the blue-chips, at some point, if there is continued weakness in the Transports this month.
All the best,