Wall Street turns around on Tuesday on positives all around
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- Wall Street rallies on hopes of a trade deal between US and China.
- Positive earnings give the DJIA a boost, ending up 177 points at 27,349.
U.S. stocks finished higher on Tuesday as investors cheered the prospects of a deal between the US and China on confirmations that a negotiating team from Washington will meet that same of Beijing's on Monday next week to open up discussions once again.
There was also the announcement of a White House and Congressional deal on the federal budget and debt ceiling along with positive corporate earnings. The Dow Jones Industrial Average, DJIA, ended up 177 points at 27,349, while the S&P 500 index put on 20 points to 3,005 and the Nasdaq Composite Index rose 47 points to 8,251. Better-than-expected earnings from Dow Jones Industrial Average components, Coca-Cola and United Technologies reported before the market opened also kicked started a positive session off for the day.
US data bucks the positive trend
Despite the posive headlines elsewhere, there were some downbeat data released on Tuesday with the June US existing home sales falling 1.7% m/m following an upwardly revised 2.9% gain (2.5%) in May. The Richmond Fed manufacturing index fell well short of expectations in July, in contrast to the sharp rises in other US regional surveys published recently. The headline index fell to -12 vs +2 in June as new orders plunged to -18 vs -2 and shipments fell to -13 vs +5. "Heightened trade anxiety may well have played a role as international trade accounts for 32% of South Carolina’s state GDP and 15% in North Carolina. In Maryland and the Virginias international trade accounts for 11% of state GDP on average," analysts at ANZ Bank explained.
DJIA levels
While there was a bid on the session for the DJIA, technically, the index remains confined to familiar ranges. The prior session's doji on the daily chart gave the green light to bulls to step back in following a series of down days. On the upside, bulls can target the record highs and then look beyond there to the 28000 levels. The 1.272% Fibo extensions of the 2019 range comes in the 28820s. On a break to the downside, below the 20-Day moving average at 26938, the 23.6% retracement of the 3rd June low to 12th July recently printed high falls in at 26706 which meets April 23rd and 1st May double-top highs.
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