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Dovish FED Boosts U.S. Stocks

Posted Thursday, June 20, 2019 by
Shain Vernier • 1 min read

U.S stocks are on the march north this morning, fueled by optimism over Wednesday’s dovish FED policy announcements. For the first half hour of trade since the Wall Street open, the DJIA DOW (+240), S&P 500 SPX (+28) and NASDAQ (+90) have posted solid gains.

The key driver of today’s markets has to be reassurances from FED Chairman Jerome Powell that forthcoming policy will be “data dependent.” Basically, Powell took the FED’s stance from “patient” to “assertive” regarding the preservation of economic growth. The CME FEDWatch Index is now showing a 100% chance of a rate cut coming in July ― this is a truly staggering figure in comparison to the “restrictive” tone of last September.

Dovish FED Drives Stocks Toward All-Time Highs

The three leading U.S. indices are firmly on the bull, closing in on fresh all-time highs. To say that today’s strength is due to a dovish FED is the understatement of the week. Bidders are snatching up risk, with many betting that the DJIA is heading toward 30,000.

June E-mini NASDAQ Futures (NQ), Daily Chart, Post-FED
June E-mini NASDAQ Futures (NQ), Daily Chart

Overview: We are down to our last few days for the June E-mini NASDAQ futures contract, as Friday marks expiration. At this point, it is all systems go for the June E-mini NASDAQ and the Double Top (7872.50-7879.50) appears to be in jeopardy. Right now it is long-or-nothing for the U.S. indices.

It is difficult to overstate just how much of a game-changer dovish monetary policy really is. The CME FEDWatch is calling a July rate cut of at least ¼ point certain and the chance of a ½ point drop stands at 38%. This is a huge deal and may be the catalyst for a bullish Q3/Q4 2019 for the U.S. indices.

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