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Wall Street records solid gains boosted by energy and financials

  • Energy sector leads gains on Tuesday.
  • Rising bond yields boost financials.
  • CBOE Volatility Index falls more than 3%.

Major equity indexes in the United States started the day slightly higher and extended their gains for the second straight day on Tuesday as the lack of new headlines on trade conflict allowed investors to remain focused on the upbeat earnings figures and the positive macroeconomic data releases from the United States. The CBOE Volatility Index, Wall Street's fear gauge, fell more than 3% to confirm the improved market sentiment

Crude oil prices on Tuesday continued to recover last week's losses as President Trump's national security adviser said that they were planning to impose more sanction on Iran. Although WTI erased some of its gains in the NA session after the EIA's monthly report showed that the oil production in the U.S. in 2019 was expected to increase by more than previously estimated, the S&P 500 Energy Index closed 0.72% higher to outperform other major sectors.

"Energy has been trending higher for a number of months as oil prices have climbed higher, but we’re seeing a pickup in that price as sanctions on Iran become a reality,” Quincy Krosby, chief market strategist at Prudential Financial in New Jersey, told Reuters.

Meanwhile, a sharp rise seen in the US T-bond yields helped the S&P 500 Financials Index end the day 0.5% higher.

The Dow Jones Industrial Average added 125.64 points, or 0.49%, to 25,627.82, the S&P 500 rose 8.14 points, or 0.29%, to 2,858.54 and the Nasdaq Composite gained 24.10 points, or 0.31%, to 7,883.77.

DJIA Technical Outlook (via FXStreet Chief Analyst Valeria Bednarik)

"Trading at its highest since last February, the Dow is up for a third consecutive day and poised to extend its advance according to technical readings in the daily chart, as indicators extended their modest but steady advances in positive ground, with the RSI indicator currently at 71. The 20 DMA extends its bullish slope below the current level and above the larger ones, another sign that bulls are in control."

"In the 4 hours chart, technical indicators are retreating from their highs alongside with the index, but remain well into positive territory, as the 20 SMA resumed its advance, now over 200 points below the current level." 

According to the analyst, supports could be seen at 25,579, 25,528, and 25,464 while resistances align at 25,640, 25,690, and 25,745.

Author

Eren Sengezer

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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