Major equity indexes sustained their recent bullish momentum on the first trading day of the fourth quarter and advanced to fresh record highs.
Today's data from the U.S. pointed to a strengthening economy as the business activity in the manufacturing sector continued to expand. Moreover, hurricanes Harvey and Irma's negative impact on the supply chains caused by hurricanes Harvey and Irma pushed raw material prices higher, likely resulting in higher PPI in near-term. Commenting on today's market action, "today is a continuation of potential enthusiasm on the tax front and the data this morning. That was a good manufacturing number," Scott Wren, senior global equity strategist at Wells Fargo Investment Institute in St. Louis, Missouri, told Reuters.
Moreover, reports of former Fed Governor Kevin Marsh, a known hawk, meeting with President Donald Trump and Treasury Secretary Steven Mnuchin for a potential nomination as the next Fed chair boosted the financials. The S&P 500 Financials Index (SPSY) finished the day higher 0.33% higher.
On the other hand, falling crude oil prices on increasing OPEC output in September weighed on energy shares with Exxon Mobil dropping 0.43%. The barrel of West Texas Intermediate settled at $50.59, losing more than $1 on the day.
The Dow Jones Industrial Average added 153.23 points, or 0.68%, to close at 22,559.11. The S&P 500 rose 9.8 points, or 0.39%, to 2,529.16 and the Nasdaq Composite gained 20.61 points, or 0.32%, to 6,516.57.
DJI technical outlook
Valeria Bednarik, Chief Analyst at FXStreet, writes, "Dow's daily chart shows that the RSI indicator accelerated north, currently at 75, while the Momentum lags, consolidating anyway within the bullish territory. Furthermore, the index continues developing above bullish moving averages, all of which favors further gains ahead. Shorter term, and according to the 4 hours chart, the index maintains its strong bullish bias, also advancing sharply beyond bullish moving averages, and while technical indicators remain within extreme overbought territory, anyway presenting upward slopes."
According to the analyst, supports could be seen at 22,500 22,456 and 22,403 while resistances align at 22,580, 22,625 and 22,660.
Headlines from the NA session
- Forex today: firm data signals supporting the case for a Fed hike in December
- Market wrap: US dollar index is up 0.5% - Westpac
- US ISM: recovery continues but strong numbers partly due to hurricanes - Danske Bank
- US NFP: Harvey and Irma likely to knock down payroll growth - Wells Fargo
- Fed's Kaplan: 10-year yield is a natural constraint on how high Fed can raise rates
- Fed's Kaplan: We are going to have to look hard if we should raise rates in December
- Atlanta Fed: GDPNow model forecast for real GDP growth in Q3 rose to 2.7%
- US: Economic activity in the manufacturing sector expanded in September - ISM
- US: September PMI signals further improvement in manufacturing conditions - Markit
- US: Construction spending during Aug 2017 was estimated at an annual rate of $1,218.3 bln
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