S&P 500 Looks Ready To Test The 4000 LevelOil will also be in traders’ focus amid rising tensions in the Middle East.
Stimulus Hopes And Vaccine Optimism Push Stocks Higher
U.S. markets are closed today in observance of Presidents’ Day but traders will rush back to their screens on Tuesday as S&P 500 looks ready to test new highs.
The stock market is currently supported by stimulus hopes and vaccine optimism. Traders believe that the final version of the new U.S. stimulus package will be close to Biden’s original $1.9 trillion proposal which is bullish for stocks. It should be noted that some of the money from $1,400 stimulus checks may be used by workers to buy stocks, which will provide additional support.
Meanwhile, the U.S. managed to achieve significant progress on the vaccination front, and the number of daily new cases is declining. The recent stabilization on the virus front should provide an addition boost for the economy and markets.
Oil In Focus As Yemen’s Houthis Attack Saudi Arabia’s Infrastructure
WTI oil managed to get above the psychologically important $60 level and continued to move higher after Yemen’s Houthi group stated that it struck Saudi Arabia’s airports with drones.
Saudi Arabia did not confirm this statement at the time of writing. Previously, Saudi Arabia claimed that it destroyed a drone fired by the Houthis.
The oil market is in a bullish mode as crude inventories continue to decline due to Saudi Arabia’s decision to cut oil production by 1 million barrels per day (bpd) in February and March. In this environment, any tensions in the Middle East serve as a positive catalyst for oil and oil-related equities which may enjoy strong support when the market opens on Tuesday.
U.S. Dollar Remains Under Pressure As Traders Stay Focused On Riskier Currencies
Global market optimism has recently put material pressure on the American currency which failed to continue its rebound that began in early January.
Interestingly, the recent increase in U.S. Treasury yields did not provide much support to the U.S. dollar. The yield of 30-year Treasuries have managed to settle above 2.00% as investors prepared for higher inflation as prices could be boosted by the new round of stimulus.
If the American currency moves closer to yearly lows, stocks may get additional support despite rising bond yields.
For a look at all of today’s economic events, check out our economic calendar.