The SP500 gains ground as oil prices plummet, influenced by comments from Fed’s Bowman suggesting possible rate cuts. While manufacturing PMI remains stable, services PMI drops slightly. NASDAQ benefits from Tesla’s jump due to its robotaxi launch, and Dow Jones rises on tech stock demand. The article concludes with insights from veteran trader Vladimir.
The SP500 is seeing upward movement today, buoyed by a dramatic drop of 7.5% in oil prices, following a recent, albeit weak, strike by Iran on a U.S. military base in Qatar. Investors seem to be taking comfort in the belief that Iran is unlikely to escalate tensions significantly, thereby safeguarding oil supply routes. Additionally, dovish comments from Fed Governor Michelle Bowman are providing further support for the SP500, with Bowman suggesting that it may be time to contemplate cuts to the federal funds rate. As a result, Treasury yields have edged lower, a shift that typically shines a favorable light on stocks.
Today’s trading also had traders looking closely at the latest PMI reports. The manufacturing PMI held steady at 52 in June, slightly above analyst forecasts of 51, while the services PMI decreased from 53.7 in May to 53.1 in June, against a consensus estimate of 52.9. For those unfamiliar with the PMI readings, anything above 50 indicates expansion in that sector. Unsurprisingly, energy stocks took a hit, leading to some of the most significant losses in the SP500, as the market reacted to plunging oil prices. On the other hand, other sectors managed to gain traction amid this backdrop.
At present, the SP500 is attempting to maintain its position above a nearby resistance level around 6000 to 6010. Should it successfully establish itself above this threshold, it could reach for the next resistance range between 6090 and 6100.
Meanwhile, the NASDAQ is pushing past the 21,800 mark, particularly driven by a surge in Tesla’s stock, which soared by 9.1% following the launch of their robotaxi services in Austin. The nearest resistance for NASDAQ is located in the range of 21,950 to 22,000. A successful challenge of this level may pave the way for a test of the 22,250 to 22,300 range.
The Dow Jones is also climbing, driven by heightened interest in tech stocks, with heavyweights like IBM and Microsoft making strides today. If the Dow can break through its resistance around 42,700 to 42,800, it could target the next level at 43,300 to 43,400. The RSI indicator is currently in a moderate range, suggesting there is still potential for upward movement in the immediate future.