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S&P 500; US Indexes Fundamental Daily Forecast – Rising Rates Have Investors on Edge

By:
James Hyerczyk
Published: Feb 13, 2018, 11:32 UTC

After posting solid gains on Monday, U.S. stock index futures are trading lower early Tuesday. Yesterday, the blue chip Dow Jones Industrial Average

U.S. Stock Indexes

After posting solid gains on Monday, U.S. stock index futures are trading lower early Tuesday. Yesterday, the blue chip Dow Jones Industrial Average settled more than 400 points higher. The benchmark S&P 500 Index and the tech-based NASDAQ Composite also finished higher.

At 1032 GMT, March E-mini S&P 500 Index futures are trading 2639.00, down 16.25 or -0.62%. March E-mini Dow Jones Industrial Average futures are at 24403, down 180 or -0.73% and March E-mini NASDAQ-100 Index futures are at 6497.25, down 34.50 or -0.53%.

E-mini Dow Jones Industrial Average
Daily March E-mini Dow Jones Industrial Average

Traders are reacting to renewed volatility, concerns over rising Treasury yields, worries ahead of Wednesday’s U.S. consumer inflation report and earnings.

Volatility returned to the markets last week with the indexes posting wild price swings throughout the sessions. On Monday, U.S. Treasury yields rose to a 4-year high after taking out last week’s high. Wednesday’s CPI report is expected to show a 0.3% increase in January. This report could determine the number of Fed rate hikes later this year.

Traders will also be watching corporate earnings. PepsiCo, Under Armour, Blue Apron, Baidu, MetLife, Western Union, Fossil, Twilio and Generac are all due to report their latest figures on Tuesday.

E-mini S&P 500 Index
Daily March E-mini S&P 500 Index

In central banking news, Cleveland Fed President Loretta Mester is expected to comment on monetary policy and its outlook at the Dayton Area Chamber of Commerce’s government affairs breakfast in Dayton, Ohio.

On the data front, the National Federation of Independent Business’ small business optimism index is slated to come out at 1100 GMT.

Traders are also digesting the latest budget released on Monday by President Donald Trump. It calls for $3 trillion in deficit reduction, which would include $1.7 trillion in mandatory spending cuts, while proposing to cut discretionary spending by 2 percent a year after 2019.

E-mini NASDAQ-100 Index
Daily March E-mini NASDAQ-100 Index

Forecast

Although U.S. equity markets are trading lower, they remain inside last week’s ranges which suggests investor indecision and further volatility. There was little reaction to the rise to a 4-year high in 10-year Treasury yields on Monday, but I don’t think this means investors weren’t paying attention to the news.

I think yesterday’s rally was more of a relief that sellers didn’t come in hard after the week-end. Today’s price action may also be reflecting general nervousness ahead of Wednesday’s CPI report. A stronger-than-expected number could trigger another leg down in the markets.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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