S&P 500; US Indexes Fundamental Daily Forecast – Dow, S&P 500 Could Get Help From Oil Sector Recovery

The major U.S. stock indexes finished mixed on Tuesday. The S&P 500 Index and Dow Jones Industrial Average struggled on low volume most of the session as investors sorted out the details of various trade negotiations taking place. The NASDAQ Composite, which seems to be immune to trade tensions, soared to an all-time high, boosted by strong gains in Netflix and Amazon.

In the cash market, the benchmark S&P 500 Index settled at 2748.80, up 1.93 or +0.07%. The blue chip Dow Jones Industrial Average finished at 24799.98, down 13.71 or -0.06% and the tech-driven NASDAQ Composite closed at 7638.75, up 32.29 or +0.42%.

Both the S&P 500 Index and the Dow struggled most of the session because of their exposure to the oil sector. Crude oil was under pressure most of the session until after the stock market closed. Both also responded negatively to reports that NAFTA may be scrapped in favor of individual agreements between the United States and Canada and the United States and Mexico.

White House economic adviser Larry Kudlow said that President Donald Trump is considering holding separate talks with Canada and Mexico. This raised concerns that the Trump Administration may be leaning towards scraping the entire North American Free Trade Agreement (NAFTA).

Investors continued to pour capital into the technology-based NASDAQ Composite, partly because that is where the positive corporate news is flowing, and partly because the stocks in the index seem to be immune from the trade issues with Canada, Mexico, China and the European Union. For example, Apple is expected to announce new software, Amazon’s sales are growing and GitHub is expected to be bought by Microsoft.

Forecast

All major stock index futures contracts are trading higher during the pre-market session. This is contributing to the call for a higher cash market opening.

The Dow and S&P are getting a boost from a late session surge in crude oil that spilled over to the energy sector. The price action is being driven by a private industry report that showed a larger-than-forecast crude oil inventory drawdown.

The U.S. markets are getting no help from the Asian markets, which finished mixed on trade anxieties. Asian investors are focusing on U.S. – China trade relations. On Tuesday, China reportedly agreed to purchase almost $70 billion in U.S. agriculture and energy products from the U.S. if the latter held off on imposing tariffs against Chinese imports, according to sources cited by The Wall Street Journal.

The European markets are watching the activity in Italy where a new government took over the week-end. In Spain, Prime Minister Pedro Sanchez has begun to organize his cabinet.

Both areas still remain a hotbed of geopolitical risk that could threaten to derail the stock market rally if another crisis arises.