- Rising crude oil prices boost energy shares.
- Apple recovers sharply and lifts the tech sector.
- Trade worries continue to cap gains.
After closing the previous day mixed, major equity indexes in the U.S. started the day on a positive note and preserved its momentum to close the day modestly higher.
Following the reports suggesting that the OPEC could extend its output cut deal, crude oil prices gained traction on Tuesday and the barrel of West Texas Intermediate added more than 2% on the day as it broke above the $69 mark. Fueled by the oil rally, the S&P 500 Energy Index finished the day 1% higher. In the meantime, Apple shares, which suffered heavy losses yesterday on worries over the potential negative impacts of trade tariffs on the company's revenues, recovered decisively on Tuesday to provide a boost to the S&P 500 Information Technology Index, which added 0.85% on the day.
"Maybe tech has taken the punch and is recovering, and investors are getting more confident that the leader is back. That's been the main fuel for the market," Alan Lancz, president of Alan B. Lancz & Associates Inc, an investment advisory firm, based in Toledo, Ohio, told Reuters.
Nevertheless, investors remain cautious as they wait for the additional $200 billion worth of tariffs on Chinese imports to go into effect. Earlier today, China asked the WTO for authorization to impose $7 billion/year sanctions on the United States.
DJIA technical outlook via FXStreet Chief Analyst Valeria Bednarik
The daily chart shows that the Dow temporarily fell below a firmly bullish 20 DMA but managed to regain ground above it as the day went by. The same chart also shows that it holds well above the larger ones, while technical indicators remain directionless, the Momentum near its 100 level and the RSI currently at 58, leaning the scale toward the upside without confirming additional gains ahead.
Shorter term, and according to the 4 hours chart, the index offers a neutral stance, as it finished a few pips above a flat 20 SMA, while technical indicators recovered from nearly oversold readings to turn flat around their midlines, failing to provide clues on upcoming direction.
Support levels: 25,928 25,871 25,814.
Resistance levels: 26,018 26,071 26,125.
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