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NASDAQ

DOW, S&P 500 Poised To Close Flat

Posted Wednesday, November 6, 2019 by
Shain Vernier • 2 min read

Amid a muted economic calendar, the U.S. indices haven’t done much of anything today. With the closing bell only a few hours away, the DJIA DOW (-9), S&P 500 SPX (+0.5), and NASDAQ (-29) are hovering near flat. Given earnings season generating two-way action and a limited news cycle, values of the U.S. stock indices are holding firm near all-time highs.

Over the past 6-months or so, much has been made about the inverted yield curve in U.S. Treasuries. Bonds of all types have been under pressure seemingly since 2019 began, with falling yields becoming the norm. This morning’s auction of the U.S. 10-Year Note brought a surprise rally in yields from 1.590% to 1.809%. The 10-Year Note is a staple of institutional portfolios ― today’s jump in yields suggests that many of the big money players are taking a risk-on approach as 2019 draws to a close. 

Perhaps bond traders are tuned into President Trump’s social media feed. Earlier today, Trump took to Twitter to reinforce the recent strength in the DOW, S&P 500 and NASDAQ: 

“Stock Markets (all three) hit another ALL TIME & HISTORIC HIGH yesterday! You are sooo lucky to have me as your President (just kidding!). Spend your money well!” 

While Trump’s optimism toward stocks is a bit tongue-in-cheek in the wake of impeachment proceedings, he does have a valid case. Although the current odds of impeachment sit at about 80% in favor of, the markets remain strong. Is this a case of the FED’s dovish policy spiking a bullish view of equities or are traders betting heavily on Trump being acquitted in the Senate next spring?

S&P 500 Holds Firm Near All-Time Highs

From a technical perspective, there isn’t a whole lot to scrutinize for the S&P 500. Bidders are on a four-week winning streak, having driven the market to new heights near 3100.00.

December E-mini S&P 500 Futures (ES), Weekly Chart
December E-mini S&P 500 Futures (ES), Weekly Chart

Overview: For now, the trend is bullish and well off any sort of correction for the S&P 500. House impeachment efforts are being routinely ignored and values continue to rise in spite of a December FED rate looking to be a longshot (about 8% according to the CME FEDWatch Index). If nothing else, sentiment is positive and may improve further ahead of a widely expected late-November U.S. government shutdown.

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