S&P 500; US Indexes Fundamental Daily Forecast – Republicans Fail to Repeal/Replace Obamacare

There’s breaking news out of Washington early Wednesday which may have a negative effect on the U.S. market. So far, the U.S. indexes have retreated from their pre-market highs to break-even for the session.

According to CNBC, President Trump was delivered a setback early Wednesday after Republicans failed to get enough votes to repeal and replace Obamacare. The vote was 43 in favor and 57 against. Nine Republicans voted against the measure.

In other political news, the U.S. House of Representatives voted overwhelmingly for new sanctions on Russia, Iran and North Korea, despite the Trump administration’s objections.

Market Recap

U.S. stock indexes firmed before the opening on Tuesday and never looked back the rest of the session, closing higher after several major companies reported better-than-expected quarterly results.

In the cash market, the benchmark S&P 500 Index settled at 2477.13, up 7.22 or +0.29%. The blue chip Dow Jones Industrial Average closed at 21613.43, up 100.26 or +0.47% and the technology-based NASDAQ Composite ended the session at 6414.07, up 3.26 or +0.05%.

The Dow Jones Industrial Average posted the highest gain, led by strong performances in Caterpillar and McDonald’s. It was followed by the S&P 500 Index, which hit intraday and closing records. The energy sector rose more than 1 percent on the back of a sharp rise in crude oil. It was followed by strong performances in the financials and energy sectors.

The NASDAQ Composite also hit an intraday and closing record, but gains were limited by a weak performance in Alphabet – Google’s parent stock.

Economic News

According to the S&P CoreLogic Case-Shiller home price index, major metro area home prices rose 5.7 percent in May. However, this was slightly below the forecast and previous read.

The Home Price Index (HPI) rose 0.4%, lower than the 0.5% estimate. The previous month was revised down to a 0.6% gain.

The Richmond Manufacturing Index was a solid 14, up from 7. It also beat the estimate.

Conference Board Consumer Confidence came in well above expectations at 121.1. Traders were looking for 116.5. The previous month was revised lower to 117.3.

Forecast

All eyes will be on the Fed, and Facebook stock on Wednesday.

The latest U.S. Federal Reserve Decision is due at 1800 GMT. The central bank is widely expected to leave interest rates unchanged. However, investors will be keeping an eye on what the central bank says about inflation and the unwinding of its $4.5 trillion balance sheet.

Traders will be looking for Fed comments on economic growth. The state of the job market is also likely to be touched on. Investors will be most interested in the central bank’s opinion on inflation. We’ve had four months of effectively weaker inflation than expected and we’ve moved away from the Fed’s targets.

Facebook is set to report second-quarter earnings after the close on Wednesday. This report could have a huge influence on the NASDAQ Composite.

Investors will also be watching the crude oil market. Prices spiked higher on Tuesday and the buying has carried over into Wednesday’s session. This could underpin energy stocks, giving the Dow and S&P 500 a boost.

I don’t think stock traders will be paying too much attention to the Fed unless the news is extremely dovish. In this case, stocks could spike higher because this means money will continue to be cheap.