Stocks began the week holding near the breakeven level.
Quantitative easing is still here. It did not disappear over the weekend, nor is it likely to go away anytime soon, as St. Louis Federal Reserve President (and FOMC member) James Bullard discussed on Monday. With no economic news to move the markets, the major stock indices hovered near the breakeven level on Monday. Although stocks began to pick up some strength after 10 EDT, the momentum did not hold and the major indices slid back toward Friday’s closing levels.
The upgrade by Standard & Poor’s of the outlook on its AA+ credit rating for the United States from “negative” to “stable” failed to be a market-moving event.
The Dow Jones Industrial Average (NYSEARCA:DIA) declined 9 points to finish Monday’s trading session at 15,238 for a 0.6-percent decline. The S&P 500 (NYSEARCA:SPY) finished Monday’s session with 0.03-percent dip to close at 1,642. The Nasdaq 100 (NASDAQ:QQQ) slipped 0.01 percent to close at 2,990. The Russell 2000 (NYSEARCA:IWM) climbed 0.51 percent to 992. In other major markets, oil (NYSEARCA:USO) declined 0.47 percent to close at $34.00.
On London’s ICE Futures Europe Exchange, July futures for Brent crude oil declined by 63 cents, or 0.60 percent, to $103.74/bbl. (NYSEARCA:BNO). June gold futures advanced by $3.10, or 0.22 percent, to $1,386.10 per ounce (NYSEARCA:GLD). Transports were stuck in park on Monday, with the Dow Jones Transportation Average (NYSEARCA:IYT) unchanged at 1,338.
The major European stock indices held close to the breakeven level on Monday, in the absence of any economic reports concerning the region (NYSEARCA:VGK). The Euro STOXX 50 Index finished Monday’s session down 0.17 percent to 2,719 — remaining just a whisker above its 50-day moving average of 2,715. Its Relative Strength Index is 45.10 (NYSEARCA:FEZ).
Japanese stocks skyrocketed on Monday following a report that the nation’s GDP grew 4.1 percent in the first quarter, despite a preliminary reading of 3.5 percent. The nation’s trade surplus grew to 750 billion yen in April, exceeding earlier expectations for a trade surplus of 310 billion yen. The yen weakened to 98.35 per dollar. A weaker yen causes Japanese exports to be more competitively priced in foreign markets (NYSEARCA:FXY). Automakers and electronics manufacturers led the advance. The Nikkei 225 Stock Average skyrocketed 4.94 percent to 13,514 (NYSEARCA:EWJ).
Technical indicators reveal that the S&P 500 remained above its 50-day moving average of 1,608 after closing at 1,642 – as bears hope that we could be watching the formation of a double-top pattern on the chart, which would signal a decline. Its Relative Strength Index slipped from 54.44 to 54.23. Although the MACD remains below the signal line, providing some support for the likelihood of a decline, both are on converging trajectories. The MACD histogram indicates an upward trend.
For the day, all sectors were mixed, with the materials sector taking the lead with a gain of 0.47 percent. The consumer discretionary sector trailed the group with a loss of 0.30 percent.
Consumer Discretionary (NYSEARCA:XLY): -0.30 percent
Technology (NYSEARCA:XLK): +0.22 percent
Industrials (NYSEARCA:XLI): -0.30 percent
Materials (NYSEARCA:XLB): +0.47 percent
Energy (NYSEARCA:XLE): -0.28 percent
Financials (NYSEARCA:XLF): +0.05 percent
Utilities (NYSEARCA:XLU): -0.03 percent
Health Care (NYSEARCA:XLV): +0.14 percent
Consumer Staples (NYSEARCA:XLP): (unchanged)
Bottom line: The major American stock indices began the week by holding near Friday’s closing levels as the upgrade by Standard & Poor’s of the outlook for its AA+ sovereign credit rating of the United States from “negative” to “stable” failed to be a market-moving event.
John Nyaradi is the author of The ETF Investing Premium Newsletter.
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