Dow breaks 21,000 in intraday trading, major indexes see gains following a conciliatory speech to Congress from President Trump

March 1, 2017
By Vlad Karpel

Investors are feeling more confident and bumping up equity markets after Tuesday night’s speech from President Trump to the U.S Congress. The lack of economic protectionism in his remarks, which peppered his campaign rhetoric, has restored comfort to many investors. Although details of an economic agenda were somewhat sparse, it was the tone that made the difference. The conciliatory and ‘presidential’ attitude displayed last night was a preview of a less combative Trump, which the public has become accustomed to. He declared he would push for nearly $1 trillion in infrastructure spending, as well as “massive tax relief” for middle class Americans.  

Markets are also suggesting a higher expectation of a March interest-rate hike from the Fed. New York Fed President William Dudley indicated on Tuesday that an increase is becoming “a lot more compelling.” San Francisco Fed President John Williams also remarked that a rate hike was “on the table for serious consideration.”

The DJIA is currently up 1.17% at 21,054. The Nasdaq-100 is up 1% at 5,883.54 and the S&P 500 is currently trading at 2,390.38 which is up 1.13% from the open.

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows slight steady gains relative to today’s conditions. Positive vector figures climb from 0.07% today toward 0.50% within the next ten trading sessions. Today’s support and resistance is 2,361.16 (± 3.14) and 2,370.86 (± 3.15), respectively. The predicted close today is 2,367.09.   

 

Upcoming Events & Reports

Federal Reserve Chairwoman Janet Yellen will be speaking at 1 p.m. Eastern time on Friday. This will mark the beginning of the Fed’s ‘quiet period’ until the March 14-15 meeting. This rule only bars remarks on monetary policy, and there will be one address made on March 6 by Minneapolis Fed Governor Neel Kashkari.

Fed Gov. Lael Brainard will be speaking Wednesday afternoon, and Dallas Fed President Rob Kaplan will speak Wednesday evening.

 

Oil

Crude prices were trading choppy on Wednesday, following data from the U.S Energy Information Administration showing an increase of 1.5 million barrels for the week ending Feb. 24. Although this figure is smaller than expected, it continues the seesawing nature of the oil market currently.  West Texas Intermediate is currently priced at $54.03 per barrel, down 0.20% from the open.

Looking at USO, a crude oil tracker, our 10-day prediction model shows consistent gains. Positive vector figures range hover around 1% within the next ten sessions. The fund is currently trading at 11.45. Today’s prediction sees support at 11.30 (± 0.04) and resistance at 11.51 (± 0.04). The predicted close for today is 11.49.  

 

Gold

Gold prices are up 0.57%, or $7.10 today at $1,245 a troy ounce. The perceived safe-haven metal is losing its temporary appeal to investors following comments from Fed officials signalling higher expectations for a mid-March interest-rate hike. These same comments also boosted the U.S. dollar, which the non-fiat metal is priced in. When the dollar strengthens, it makes gold less attractive to investors using different currencies.  

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows slight positive corrections after today’s dip. Relative to today’s conditions, the positive vector values build toward 1% near the end of the window.  The gold proxy is currently trading at 118.53, down 0.59%. Today’s predicted low is 118.45 (± 0.36) and the predicted high is 120.24 (± 0.36). The predicted close today is 118.60 with a vector value of -0.23%.  

 

Treasuries

Recent remarks from major Fed officials are hinting at a mid-March interest-rate hike, and the markets have priced in even higher expectations. On Monday, the odds for a March rate hike stood at 50%, but they are now at 80%. This move was largely due to comments from New York Fed President William Dudley, who is known as being more dovish. A shift in stance from him is regarded as a significant signal.  The yield on the 10-year Treasury note is making gains, currently up 0.064% at 2.459%.

Using the iShares 20+ Year Treasury Bond ETF (TLT) as a proxy for bond prices in our Stock Forecast Tool, we see slight positive movement in our 10-day prediction window. Relative to today’s conditions, we see positive vector figures spiking above 1% and then drawing down to below 0.50% toward the end of the window. The ETF took a hit today and is priced at $119.095- down 2.17% from the open. The predicted close today is $121.64 with a low and high of 121.30 (± 0.25) and 122.13 (± 0.26), respectively.  

 

Volatility

The CBOE Volatility Index (VIX) is currently down 7.66% at 11.93.  Relative to today’s conditions, the 10-day prediction window shows strong upward movement. The predicted close today is 12.63 with a positive vector of 0.26%. Today’s predicted lows and highs are 11.86 (± 0.20) and 12.92 (± 0.22), respectively.


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