S&P 500; US Indexes Fundamental Forecast – February 20, 2017
U.S. stock traders shrugged off growing concerns over the outcome of the French elections to post another record close on Friday. The price action suggests the markets are being driven higher by momentum and optimism over Trump’s tax plan that is expected to be released in a week or two, and his soon to be released economic policy plan and additional relaxed regulations.
In the cash market, the benchmark S&P 500 Index closed at 2351.16, up 3.94, or +0.17%. The blue chip Dow Jones Industrial Average finished the session at 20624.05, up 4.28 or +0.02% and the tech-based NASDAQ Composite posted a close at 5833.46, up 18.56 or +0.32%.
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Forecast
Last week, price action suggests that investors aren’t too concerned over the direction of interest rates at this time. Well, I should say, they aren’t worried about a rate hike, or even two or three this year. Because rate hikes will mean the economy is growing at a fast enough pace to warrant this lofty stock prices.
The price action also suggests that investors aren’t too worried about the elections in France either. This is because instead of selling out of their positions, professional investors tend to lay off the risk in safe assets like U.S. Treasurys, gold and the Japanese Yen.
So while some are worried in France that far-right candidate Marine Le Pen may upset the status quo like Brexit and Trump, investors just have to point to the performances in the U.K.’s FTSE and the U.S. indexes to say, “What are you getting all worried about”?
Today is a bank holiday in the U.S. so volume is expected to be light. Nonetheless, you should watch for volatility spikes and be careful about getting caught on the wrong side of a day trade because of the thin trading conditions.
I don’t expect much movement today, but I would be reluctant to chase the market higher or lower.