- Bulls take charge at the start of a new month.
- Risk-on while the case for an imminent Fed taper is dialled back.
It was another solid performance put in by the bulls on Wednesday with a mid-week push into fresh closing highs for the NASDAQ and the S&P 500 not far behind.
A low rate environment is propelling the tech sector forward as bets of an imminent taper from the Federal Reserve are dialled down underpinned by a shocking miss in the US ADP jobs report.
Unofficially, the Dow Jones Industrial Average dropped 47.51 points, or 0.13%, to 35,313.22, the S&P 500 added 1.49 points, or 0.03%, to 4,524.17. The Nasdaq Composite put on 50.15 points, or 0.33%, to 15,309.38.
A report by ADP, published ahead of the US government's more comprehensive Nonfarm Payrolls employment report on Friday, has shown that private employers hired far fewer workers than expected in August.
In what might be considered a highly negative prelude to Friday's data, the private payrolls rising by 374,000 in August, well short of the 613,000 forecasts.
Following on from a dovish speech made by the Fed's chair, Jerome Powell, last Friday, Wall Street's main indexes have hit record highs with the benchmark S&P 500 notching seven straight monthly gains.
Much will now depend on the Friday jobs report and analysts are already predicting a decelerating outcome with the pace of hiring slowing somewhat after the strong report in July.
''Payrolls probably slowed sharply after a 943k surge in July,'' analysts at TD Securities said.
''The pattern reflects less help from the seasonal adjustment process, particularly for the government sector, but underlying momentum appears to have faded as well.'
''That is the signal from the Homebase data, even as claims have been falling. Slowing would help the case for no tapering announcement in September,'' the analysts added.
meanwhile, the next important data that could be the nail in the coffin for bears will be in the form of the US Consumer Price Index next week.
The combination of the data and risks of the highly contagious Delta coronavirus variant will be weighed by investors as to whether the Fed will even be in a position to taper down the support of its quantitive easing programme in the coming months, a support that has been a life support machine to stocks throughout the pandemic.
Dow daily chart
The bulls are in anticipation of a 21-50 day EMA bullish crossover:
The index hs painted a bullish dandle stick at the close with the confluence of trendline support not far behind at the 61.8% Fibonacci level.
A push higher from here will take the 21-EMA along for the ride, critical break up through the 50 EMA in what could be regarded as a highly bullish development for the start of Autumn's trade.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stabilizes near 1.0800 as trading action turns subdued
EUR/USD holds steady near 1.0800 on Thursday and remains on track to end the day in negative territory following upbeat macroeconomic data releases from the US. The action in financial markets turn subdued as trading volumes thin out heading into Easter holiday.
GBP/USD extends sideways grind above 1.2600
GBP/USD fluctuates in a narrow channel above 1.2600 on Thursday. The better-than-expected Initial Jobless Claims data from the US and the upward revision to the Q4 GDP growth help the USD stay resilient against its rivals and limits the pair's upside.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays near 4.2% after upbeat US data and makes it difficult for XAU/USD to gather further bullish momentum.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.