Wall Street closes in the green on Central Bank easing noise and US/Mexican immigration deal optimism

• DJIA closed around 181 points up, or added 0.7%, to close near 25,721
• S&P 500 put on about 17 points, or 0.6%, to close near 2,844.
• Nasdaq Composite COMP added around 40 points, or 0.5%, to finish near 7,616. 

Wall Street ended on a positive note on Thursday as continued anticipation of a Fed rate cut remains priced in and additional optimism over Mexico and U.S. putting a deal together before tariffs are implemented helped to buoy stock prices. 

A Bloomberg report that the U.S. would delay the implementation of tariffs on all imports from Mexico helped stocks to finish even higher and extend their northerly trajectory for the session.  The Dow Jones Industrial Average DJIA closed around 181 points up, or added 0.7%, to close near 25,721, according to preliminary figures, while the S&P 500 put on about 17 points, or 0.6%, to close near 2,844. The Nasdaq Composite COMP added around 40 points, or 0.5%, to finish near 7,616. 

The European Central Bank’s (the ECB's) assessment of the global and domestic economy was interpreted by some as bearish and on the basis that the ECB  extending its forecast for how long it will keep rates this low into at least the first half of 2020 vs the previously indication that rates would remain on hold through the end of 2019, was interpreted as dovish. This also gave stocks a lift.  

ECB on the offensive but short of ammo: 

Analysts at ANZ bank explained that the ECB was very much on the front foot overnight as it extended forward guidance on how long interest rates will stay at current levels into the middle of 2020.

"It also emphasised that it will not hesitate to ease policy further should conditions warrant, noting there is “considerable headroom” for more QE. It was a dovish message where Draghi again stressed the downside risks to growth from rising protectionism and weakness in the manufacturing sector. Service and construction nonetheless remain on a moderate upward trend so the risks of a return to deflation are virtually non-existent, he said, whilst the ECB sees the risks of recession as very low. Taken in aggregate, however, growth is still soft and expected to fall back in Q2 and Q3. Inflation may well therefore dip in coming months and the ECB will need to remain very vigilant. Market-implied inflation expectations actually fell overnight. This perhaps reflects that the ECB has limited room for manoeuvre compared to the US Fed, and also the fact that Draghi has less than five months left in the job".

DJIA levels

On a technical basis, the DJIA index extended above the 28th May gap and closed above the daily pivot point, piercing the 50 D EMA when rallying to its highs of the day. The high of the session marries up with the 7th May low meeting the 61.8% Fibo retracement level of the 11 Mar swing lows and 1st May swing highs. 25949 is the next upside line in the sand which is the area between the high of the 29th March close ahead of the opening bullish gap to 2607. The 61.8% Fibo of the swing 1st May high to 3rd June lows also falls in as a confluence of that said area of potential resistance. On the flipside, below the 200 D EMA and then the 25200 level, as being around the 11th March swing lows, on a break of 25000, bears can look towards 24500s and then 50% of the upside run made at the end of Dec at 24150.