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S&P 500; US Indexes Fundamental Forecast – March 21, 2017

By:
James Hyerczyk
Updated: Mar 21, 2017, 06:37 UTC

The major U.S. stock indices closed lower on Wall Street on Monday as investors focused on commentary from several key Federal Reserve officials

Stocks SP 500

The major U.S. stock indices closed lower on Wall Street on Monday as investors focused on commentary from several key Federal Reserve officials throughout the session.

In the cash market, the benchmark S&P 500 Index closed at 2373.47, down 4.78 or -0.20%. The blue chip Dow Jones Industrial Average closed at 20905.86, down 8.76 or -0.04% and the tech-based NASDAQ-100 Index ended the session at 5900.66, down 0.34 or -0.01%.

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

The NASDAQ Composite hit a new all-time high shortly after the opening before retreating into the close. The index was driven by Apple which also reached a new all-time high. Some traders said that with the Fed interest rate decision out of the way, some investors were already positioning themselves ahead of the upcoming earnings season in April.

The lack of a fresh catalyst kept pressure on the Dow Jones Industrial Average which fell by about 10 points. Weaker financial stocks helped push the S&P 500 Index about 0.2 percent lower. The Fed’s less-hawkish monetary policy statement encouraged financial stock investors to take a little off the top after they drove prices higher in anticipation of a more aggressive Fed monetary policy.

According to Chicago Fed President Charles Evans, the central bank will wait until June to decide on the next rate hike.

“June is a time where we will obviously have two meetings to access how financial markets have evolved, everything happening in Washington and the likelihood of that, and the data evolving [including] whether or not prices are going up,” he said.

Last week’s lone dissenter on the Federal Reserve Monetary Policy Committee, Minneapolis Fed President Neel Kashkari said the voted against a rate hike last week because he wanted to see more inflation in the U.S.

Philly Fed President Patrick Harker said that it’s OK if inflation overshoots the Fed’s inflation target as the labor market tightens. “Obviously there’s a lag to inflation. We have to be careful not getting behind the curve,” said Harker.

E-mini NASDAQ-100 Index
Daily June E-mini NASDAQ-100 Index

Forecast

Over the near-term, the return of inflation and a range of uncertainties, including European elections and protectionism could put pressure on U.S. stock indices. Traders will also be watching crude oil which could rise if OPEC decides to extend its program to cut output, trim the global supply and stabilize prices.

There were no major U.S. economic reports on Monday, but investors were starting to prepare for Thursday’s GOP health care bill vote. The bill’s passing is seen as a step toward enacting tax reform. Both Republicans and Democrats have expressed concerns over the bill so the outcome is still uncertain. This could cause some volatility in the equity 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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