Fed’s Dovish Outlook Fuels Broad Based Rally in Stocks

Fed’s Dovish Outlook Fuels Broad Based Rally in Stocks

Fed’s Dovish Outlook Fuels Broad Based Rally in Stocks

$DIA, $SPY, $QQQ, $RUTX, $VXX

The S&P 500 extended weekly gainer by 2.3% Wednesday after Fed Chairman Powell said he sees current interest rates “just below” Neutral. His dovish remarks at the NY Economic Club thus providing a rally point of of the Key reversal Monday and closing the November gap open down on 19 November on the 2nd test.

Chairman Powell added that there is no preset policy path, and the Fed will be data-dependent in its decision making, which pleased investors, as the market read between the lines that the Fed is not wedded to 3 rate hikes in Y 2019, an perhaps none in December

Mr. Powell’s dovish remarks sent bond yields and the dollar lower.

The US Dollar (.DXY) Index dropped 0.6% to 96.84, the 2-yr yield fell 3 bpts to 2.80%, and the 10-yr T-Note yield – 1 bpt to 3.04% on the day.

Regarding trade disputes

Investors are very hopeful that some kind of agreement can be struck between the US and China to forestall further protectionist trade measures.

There is a growing belief that President Donald Trump might aim to keep a floor of support under the stock market by striking a more positive tone in his Saturday meeting with China President Xi Jinping. But, this it still a speculative bet given President Trump’s tough-minded tariff position and China slow moving efforts to align with US trade policy, even tough its economy is struggling and it stocks are off a few trillion dollars since the dust up began.

Back to the stock market

The S&P information technology (+3.4%), consumer discretionary (+3.2%), and healthcare (+2.5%) sectors provided strong support for the broad market.

Conversely, the utilities (-0.1%), real estate (+0.9%), and consumer staples (+1.0%) groups finished at the bottom of the sector standings.

Wednesday, the US major stock market indexes finished at: DJIA +617.70 at 25365.33, NAS Comp +208.89 at 7291.80, S&P 500 +61.65 at 2743.99

Volume: Trade on the NYSE came in at 929-M/shares exchanged

  • NAS Comp +5.6% YTD
  • S&P 500 +2.6% YTD
  • DJIA +2.6% YTD
  • Russell 2000 -0.3% YTD

HeffX-LTN’s US Major Stock Market Indexes Technical Analysis

Date Symbol Price Technical Analysis Support Resistance
28 November 2018 QQQ 168.31 Neutral (-0.23) 166.14 169.45
28 November 2018 DIA 252.6 Neutral (-0.10) 251.05 253.72
28 November 2018 SPY 274.18 Neutral (-0.15) 272.15 275.21

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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