Wall Street stages decisive recovery on Thursday
|- Technology and energy lead the gains on Thursday.
- Financials rebound following yesterday's collapse.
- Easing trade tensions improve the sentiment.
Following an uninspiring start to the day, major equity indexes gained traction and closed the day sharply higher. Reflecting the improved market sentiment, the CBOE Volatility Index, Wall Street's fear gauge, dropped 6%.
Reports of China making an opening bid to the U.S. on trade ahead of the Trump-Xi summit later this month allowed Wall Street to reverse its course today and the trade-sensitive S&P 500 Industrials Index rose 1.25%. Commenting on today's trading action, "We'd be trading sideways for quite a while ... but we've rallied on that headline. If we're stopping imposing tariffs and are talking, it's a positive." Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut, told Reuters.
After closing the previous five days in the negative territory, Apple shares finally started to recover its losses and boosted the S&P 500 Technology Index, which finished the day with an impressive gain of 2.46%. Additionally, crude oil prices for the second straight day to help the S&P 500 Energy Index end the day 1.48% higher. Finally, The S&P 500 Financials Index, which suffered heavy losses on Wednesday rebounded and added 1.44%.
The Dow Jones Industrial Average gained 208.84 points, or 0.83%, to 25,289.34, the S&P 500 rose 28.69 points, or 1.06%, to 2,730.27 and the Nasdaq Composite added 122.64 points, or 1.72%, to 7,259.03.
DJIA technical outlook by FXStreet Chief Analyst Valeria Bednarik
From a technical point of view, and despite the sharp intraday recovery from fresh November lows, the DJIA is still looking heavy, having been unable to recover beyond a directionless 20 DMA, retreating after hitting the 38.2% retracement of its latest daily decline at around 25,350. The same chart shows that the index closed above an also flat 200 DMA, while the Momentum indicator has extended its decline within the negative ground, and the RSI regained the upside, but currently stands at 45.
The 4 hours chart shows that the index met resistance around the 20 and 100 SMA, with the shortest now crossing below the larger, as technical indicators lost upward strength right below their midlines, limiting the chances of a steeper recovery ahead. The 23.6% retracement of the mentioned decline at 25,138 provided intraday support during the second half of the US session, with the bearish momentum likely to return on a break below it.
Support levels: 25,230 - 25,186 - 25,138.
Resistance levels: 25,350 - 25,397 - 25,455.
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