Wall Street slightly higher on GDP and Fed rate-cut expectations

U.S. benchmarks ended Thursday modestly higher, with rallies capped on trade risks and by fears of a slowing global economy. The Dow Jones Industrial Average (DJIA), added a modest 44 points, or 0.2%, to 25,170 while the S&P 500 ended 0.2% higher at 2,789. The Nasdaq Composite Index closed up by 0.3% to 7,568.  

Back to the Fed 

At this juncture, the market could become tired of the prolonged trade spat play and start to look back to good old fashioned economic fundamentals in the near term. Today's Gross Domestic Product rose at a healthy 3.1% annual rate in the first quarter, adjusted for seasonality and inflation, and should keep the market supported. another factor that should play into the hands of the bulls is the growing consensus that the Fed will cut interest rates. On Thursday, we saw the deepest inversion since 2007 in US yields, with the US 10-year Treasury note yield that was at 2.22%, vs the three-month T-bill that was at 2.36%, showing that investors are betting that the Fed will cut rates by the end of the year - a counter and buffer to the prospects of a slowing global economy. 

DJIA levels

For the week, however, the Dow is down 1.6% and technically, the index remains capped below the meagre of Fibo retracements at the 23.6% Fibo around 25200. The bears can now target a run towards the 24500s and then 50% of the upside run made at the end of Dec at 24150. On the upside, the 23.6% retracement of the recent swing highs and yesterday's swing lows is guarding a run to the 38.20% Fibo in the 25300s, a triple bottom level on the 4HR outlook.  25430 is roughly where the 200 D EMA is located.