SP500 Moves Higher As GDP Growth Rate Exceeds Analyst Estimates
SP500 gained some ground as traders focused on economic reports and reacted to rising Treasury yields.
GDP Growth Rate was +2.2% in the second quarter, compared to analyst forecast of +1.5%. The report highlighted the strength of the U.S. economy.
Personal Spending increased by +0.9% month-over-month in August, compared to analyst forecast of +0.8%. Consumer stays strong, which is bullish for the economy. Personal Income grew by +0.2% on a month-over-month basis, compared to analyst consensus of +0.4%.
Traders also had a chance to take a look at the ADP Employment Change report for September. The report indicated that private businesses added +90,000 jobs, compared to analyst forecast of +70,000. The previous report was revised from +38,000 to +36,000.
PCE Price index increased by +0.3% month-over-month in August, compared to analyst forecast of +0.4%. FedWatch Tool indicates that the probability of a rate hike at the next meeting in October declined to 37.1% after the release of the encouraging PCE Price Index report.
The yield of 10-year Treasuries tested the 5.30% level as bond market sell-off continued. The yield of 30-year Treasuries climbed above the 5.63% level. I’d note that rising yields did not put pressure on SP500 today.
Communication services and technology stocks were among the biggest gainers today. Energy stocks gained some ground as oil markets moved away from recent lows. Consumer defensive and real estate stocks declined as traders focused on rising yields.
In case SP500 settles below the 7700 level, it will head towards the 7660 level. A move below 7660 will open the way to the test of the support at 7615 – 7625.
On the upside, SP500 needs to settle above the resistance at 7720 – 7730 to have a chance to gain upside momentum in the near term. In this case, SP500 will head towards the resistance at 7815 – 7825.
NASDAQ Gains Ground As Traders Ignore Rising Yields
NASDAQ gained upside momentum amid strong demand for tech stocks. Intel, which was up by +3.3%, was among the biggest gainers today.
Currently, NASDAQ is trying to settle above the 30,600 level. In case this attempt is successful, NASDAQ will head towards the resistance level at 30,750 – 30,800. A move above the 30,800 level will indicate that NASDAQ is ready for a strong rally.
On the support side, a move below the 50 MA at 30,418 will push NASDAQ towards the support level at 30,200 – 30,300.
Dow Jones Price Forecast
Every new Dow Jones analysis as it publishes, today's technical signal and key levels, live price — on one page.
See all Dow Jones forecastsDow Jones Tests Support At 51,100 – 51,200
Dow Jones is losing ground amid falling demand for consumer and healthcare stocks. Merck, which is down by -2.1%, is the worst performer in the Dow Jones index today.
I’d note that SP500 and NASDAQ are supported by tech stocks, while Dow Jones is under pressure as traders react to rising yields. At this point, tech stocks are mostly immune to Fed policy outlook.
From the technical point of view, Dow Jones attempts to settle below the support at 51,100 – 51,200. If Dow Jones manages to settle below the 51,100 level, it will head towards the next support level at 50,300 – 50,400.
For a look at all of today’s economic events, check out our economic calendar.
