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S&P 500; US Indexes Fundamental Daily Forecast – Indexes Retreat from Highs Led by Tech Sector Weakness

The major U.S. equity indexes are trading mixed at the mid-session. The indexes moved sharply higher into the opening, but all three began to retreat shortly after the opening as the buying quickly driven up due to valuation concerns. Most of the downside pressure was attributed to weakness in the technology sector.

Higher markets in Asia and Europe helped drive up U.S. stock indexes during the pre-market session. This led to early strength. However, the rally stalled as traders decided not to chase the market higher during normal trading hours.

In the cash market, the blue chip Dow Jones Industrial Average was trading 21443.29, up 48.53 or +0.23%, the benchmark S&P 500 Index was at 2442.20, up 3.90 or +0.16% and the technology-based NASDAQ Composite was trading at 6250.44, down 14.81 or minus 6250.44, down 14.81 or -0.24%.

 

NASDAQ-100 Index
Daily September E-mini NASDAQ-100 Index

Stocks were driven higher early in the session by strong gains in the technology and banking sectors. U.S. bank stocks rose after the Italian government said it reached a deal to wind up Popolare di Vicenza and Veneto Banca, two regional banks. This news also helped drive up European stocks. The buying spilled over to the U.S. markets during the futures pre-market session. The announcement also lifted the Stoxx Europe 600 Banks Index 1 percent higher.

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Traders said the news that Italy was salvaging those banks removed a major concern from the Euro Zone. This encouraged European investors to seek higher yielding assets. Others said the bailout of the Italian banks was very positive. Still others thought the combination of the bailout and the positive stress test results from U.S. banks lifted safety issue concerns.

In economic news, durable goods fell 1.1 percent in May, more than the expected 0.6 percent drop. The data pushed Treasury yields lower, with the 30-year bond yield breaking below 2.7 percent.

Stocks were also supported by a rise in crude oil prices which was up about half a percent.

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

Forecast

Based on the price action at the mid-session, we’re likely to continue to see the same mixed trade. However, a late break in crude oil could turn the Dow and the S&P 500 Index lower into the close.

The European markets were helped by the bank bailout, but the U.S. markets are getting their support from higher crude. Europe is closed, but crude is still trading. If it turn lower then expect it to take stocks with it.

This article was originally posted on FX Empire

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