Short-Term Recession Risks for US Are Not High

Short-Term Recession Risks for US Are Not High

Short-Term Recession Risks for US Are Not High

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

The US economy does not face a large chance of a recession in the next 2 years and the Fed plans to keep gradually raising interest rates, Fed Chairman Jerome Powell said Thursday.

Asked whether the narrowing gap between short-term and long-term interest rates points to an impending economic downturn, Chairman Powell said the Fed analytical models suggest the economy will keep growing.

“There’s no reason to think that the probability of a recession in the next year or two is at all elevated,” Chairman Powell told a gathering of business people.

An inverted yield curve, meaning when short-term rates on US Treasury securities rise above the long-term rates, is typically regarded as a sign of a coming recession.

The Fed raised interest rates on Wednesday in a bid to keep US inflation from eventually rising too high, in its 3rd rate hike this year. Chairman Powell Thursday repeated his view that rates need to keep climbing.

Chairman Powell’s brief speech covered much of the ground he tread Wednesday in his opening statement at a news conference after the Fed announced its rate hike.

Chairman Powell said Wednesday that the US economy was in a “particularly bright moment” as policymakers forecast another three years of growth, low unemployment and stable inflation.

The S&P 500 got its 1st win of the week Thursday, adding 0.3%, as investors continued to chew on Wednesday’s policy statement from the Fed.

Stocks climbed through the morning, pushing the S&P 500 up as much as 0.7%.

However, the Bullish tone died down in the afternoon as the benchmark index descended back towards its opening mark.

FAANG names helped support Thursday’s rise.

Most S&P sectors advanced Thursday, gainers were limited.

The consumer discretionary (+0.5%), information technology (+0.5%), communication services (+0.8%), and utilities (+1.0%) sectors were the top performers, while materials (-1.0%) finished at the back of the pack. The heavily-weighted financial sector (-0.3%) under-performed yet again, extending its weekly loss to 3.0%.

Thursday, the major US stock market indexes finished at: DJIA +54.65 at 26439.93, NAS Comp +51.60 at 8041.95, S&P 500 +8.03 at 2914.00

Volume: Trade on the NYSE came in at 751-M/shares exchanged

  • NAS Comp +16.5% YTD
  • Russell 2000 +10.1% YTD
  • S&P 500 +9.0% YTD
  • DJIA +7.0% YTD

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

Date Symbol Price Technical Analysis Support Resistance
27 September 2018 QQQ 185.83 Bullish (0.34) 182.74 186.74
27 September 2018 DIA 264.25 Bullish (0.47) 263.47 268.02
27 September 2018 SPY 290.69 Bullish (0.31) 290.66 293.58

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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