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S&P 500

Stock Indices Fall, U.S./China Tensions Dominate Sentiment

Posted Friday, May 29, 2020 by
Shain Vernier • 2 min read

It has been an active morning on Wall Street, with the U.S. indices coming off weekly highs. At the midway point of the American session, the DJIA DOW (-295), S&P 500 SPX (-25), NASDAQ (-20) are in the red. Thus far, the bearish sentiment is being attributed to increasing tensions between the United States and China.

For a Friday, it’s been a busy schedule. Comments from FED Chairman Jerome Powell and a Trump presser are headlining the action. Here’s what you need to know ahead of the weekly closing bell:

  • Powell: Earlier today, Jerome Powell issued comments via webcast sponsored by Princeton University. The key quote was that Powell is “still concerned about a second wave of the coronavirus pandemic.” In addition, Powell said that a second wave “would be challenging” for the FED to manage.
  • Trump: President Donald Trump has scheduled a press conference for 2:00 PM EST. In it, Trump is expected to address U.S./Sino relations, specifically the issue of Hong Kong. This presser has the potential to drive market volatility to risk assets and safe-havens alike.

Over the past three months, a lot has changed, but much has stayed the same. COVID-19 fallout remains a major concern and U.S./China relations are in tatters. Be on the lookout for any news that may compromise the Phase 1 trade deal. If U.S./China Phase 1 is scrapped, a short-term correction in the U.S. indices is a foregone conclusion.

U.S. Indices Pull Back To Wrap Up Weekly Trade

June E-mini DOW futures have put in a robust 10-week rally from March’s lows. Going into the June trading month, it looks like a summertime run at the DOW’s February all-time highs isn’t out of the question. 

June E-mini DOW Futures (YM), Weekly Chart

Here are the key levels to watch as we roll into June:

  • Resistance(1): Weekly SMA, 26,150
  • Support(1): 62% COVID-19 Retracement, 25,144

Overview: Right now, the key number in the DJIA and June E-mini Dow is 25,000. This is a major psychological level and it is currently acting as support. As long as values are above 25,000, a topside bias toward the DOW and other U.S. indices is warranted.

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