Stock indexes continue gains, boosted by financial components and strong earnings reports

February 13, 2017
By Vlad Karpel

Stocks are on the rise today, following a round of positive earnings reports and speculation around U.S tax cuts under the new administration.  Driving this speculation is the expected confirmation of Steven Mnuchin as the new Treasury secretary. Aside from political news and economic data, an expected Fed rate hike in March has revived bullish market sentiments and is driving stock growth.  

The Dow Jones Industrial Average was pushed by financials and construction stocks- particularly Caterpillar, J.P. Morgan Chase & Co. and Goldman Sachs. Apple’s recent surge had also helped boost the index. The DJIA is currently up 0.60%, or 118 points, at 20,390.44. The Nasdaq-100 is currently up 0.48% at 5761.40, continuing its performance from Friday’s close.  The S&P 500 has reached a record market cap of $20 trillion for the first time today. The index is up 0.43% from the open at 2326.02, and some analysts see the 2400 level in striking distance within several weeks.

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows slight losses followed by consistent gains relative to today’s conditions.  The predicted close today is 2310.03, with predicted support and resistance at 2300.06 (± 3.07) and 2316.10 (± 3.09), respectively.  


Upcoming Events and Reports

Steven Mnuchin is expected to be confirmed as the new Treasury secretary tonight. Mnuchin comes from a Goldman Sachs background, and has been a financier of Hollywood film productions for some time. The tax cuts expected under his leadership has been a factor in fueling bullish market sentiments for U.S corporations.



Despite recent OPEC data showing a drop in output, crude oil futures continue to trade lower today. March West Texas Intermediate Crude is down 1.93% currently, trading at $52.82 per-barrel.  This past Friday, prices had rallied following data from the International Energy Agency which showed global supplies had dropped almost 1.5 million barrels per-day in January. Still, some are still looking at non-OPEC members, namely the U.S., where rig activation is continuing and production is increasing incrementally.

Looking at USO, a crude oil tracker, our 10-day prediction model shows a continuation of losses relative to today’s conditions. The fund is currently trading at 11.32, down 1.57% from its open. Today’s prediction sees support at 11.32 (± 0.05) and resistance at 11.52 (± 0.05). The predicted close for today is 11.41. Negative vector figures oscillate between 1.33% and 2.33%.  



Gold futures are slipping today against the U.S dollar, which caused gains in U.S equities. Because the precious metal is prices in U.S dollars, it becomes less attractive to investors using other currencies when the dollar gets stronger. Investors are also anticipating Fed rate hikes to be announced at the upcoming March FOMC meeting. Prices are currently down 0.96% at $1222.80 a troy ounce.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows a positive reversal relative to today’s conditions. Positive vector values climb from under 1% toward above 1.5% within the next 10 days.  The gold proxy is currently trading at 116.51, down 0.93%. Today’s predicted low is 117.28 (± 0.30) and the predicted high is 118.61 (± 0.30). The predicted close today is 117.94.  



Yields are rising today and bond prices are slipping, cementing a third day of gains ahead of Janet Yellen’s congressional testimony this Tuesday.  Yellen, the Federal Reserve Chairwoman, will be addressing monetary policy and offer perspective on the U.S economy before the Senate Banking Committee. Commentary from other Fed officials have inferred that raising interest rates is no longer off the table, prompting many to speculate a March hike. Currently, the 10-year Treasury note’s yield is up 1.75% from its open at 2.44%.

Using the iShares 20+ Year Treasury Bond ETF (TLT) in our Stock Forecast Tool, we see slight, incremental positive movement. Relative to today’s conditions, we see vector figures building from under 0.50% toward 2% within the next 10 days. The ETF is currently priced at $120.01, which is down 0.62% from the open. The predicted close today is 120.97 with a low and high of 119.96 (± 0.29) and 121.52 (± 0.29), respectively.



The CBOE Volatility Index (VIX) has jumped up 4.88% to 11.38 from the open today.  The 10-day prediction window shows strong upward movement which tapers off after four sessions. The predicted close today is 11.17. Today’s predicted lows and highs are 10.66 (± 0.22) and 12.05 (± 0.25), respectively.


Other news

U.S President Donald Trump met recently with Japanese Prime Minister Shinzo Abe, and they discussed trade, business investment in the U.S and security concerns about North Korea. Trump said that the U.S wants a “free, fair and reciprocal” relationship with Japan in regards to trade. After pulling the U.S out of the Trans-Pacific Partnership (TPP) trade pact, President Trump will need to work with Japan to strike a new deal.

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