Stocks Higher on Intel News; Techs Could See Strong Gains
U.S. Retail Sales were disappointing but not as bad as last
monthâ€™s number. The report showed that retail sales were down but the decline
fell in line with pre-report expectations.
Equity futures markets have retreated from their overnight
highs but have maintained a positive outlook for the day. Traders are likely to
continue to be optimistic about earnings reports throughout the day although
late in the session, there may be a reaction following the release of the Fed
News that Intel posted its best quarter ever helped drive
U.S. stock markets higher in after-market trading, but shortly before the
opening stocks are beginning to give back most of its overnight gains. Tech
indices are higher this morning than the industrials based on the strength of
tech giant Intel.
Fundamentally good quarterly results from Dow component
Alcoa and railway giant CSX Corp. fueled investor optimism during Tuesdayâ€™s
trading session.Traders leaned heavily on
the long side of the market due to expectations of better-than-expected
earnings and strong guidance this earnings season. Many traders had feared
ahead of earnings season that European sovereign debt issues and a slow down in
economy would hurt earnings and lower guidance for the third quarter.
After the markets closed on Tuesday Intel reported its
quarterly earnings. This report proved that there was great demand for
computers despite recent reports indicating a global economic slowdown.
Technically the September E-mini S&P 500 surged
following a breakout over a Fibonacci level at 1081.00. The next resistance
level is 1102.75. The September E-mini NASDAQ took out its nearest retracement
level at 1848.00, holding this level is important in order to maintain the
current rally. The September E-mini Dow has reached 50% of the entire 11140 to
9506 break at 10323. Falling back below this level could trigger a
The U.S. Dollar is trading mixed against the major
currencies. After showing strength against the Euro overnight, the Dollar is
weakening because of the poor retail sales report. The British Pound is posting
the strongest gain because of improving jobs data.
Although the Euro is trying to turn positive, some concerns
have been raised because of a report stating that eleven Euro Zone banks may
fail their stress tests. In addition, a report is circulating that Spain borrowed
a record amount of money from the European Central Bank in June prior to the
expiration of its funding program in July.
On Tuesday, U.S. Dollar plunged into the close, driven
sharply lower late in the session by the news that semiconductor chip maker
Intel blew out quarterly revenue and profit guesses in its second-quarter
Investor sentiment turned extremely positive following the
release of the Intel data, driving up demand for higher risk currencies. This
sharp increase in appetite for risk is likely to set the tone for a further
drop in the Dollar overnight and renewed selling pressure when the stock
markets open higher in New York
Tuesdayâ€™s rally was initially led by the British Pound and
the commodity-linked currencies. A turnaround early in the trading session also
underpinned the Euro after a weaker start.
Traders drove up U.S. equity markets throughout the
day in anticipation of Tuesdayâ€™s quarterly earnings report from Intel. Equity
markets opened higher this morning bolstered by good earnings news from Alcoa
and CSX Corp on Monday.
The Euro mounted a strong turnaround after a Moodyâ€™s
downgrade Portuguese debt drove it lower overnight. The initial reaction to the
news was to the downside, but investors decided to ignore this news and focus
earnings instead. The fast about face in the Euro took it through the recent
top at 1.2722 following a two-day set-back, leading to a resumption of the
uptrend and putting the market back on pace to challenge the major retracement
zone at 1.2784 to 1.2998.
A report showing U.K. inflation had risen prompted
the start of a short-covering rally in the British Pound overnight which
carried over into the day session. Traders now believe that inflation could
become the key issue which derails the U.K. recovery unless the central
bank acts upon it. Todayâ€™s initial rally indicates that investors may be
pricing in a possible rate hike by the Bank of England.
After finding support twice this week on an uptrending Gann
angle, the Sterling
closed in a position to challenge the recent top at 1.5240. A drive through
this level will turn the main trend back to up on the daily chart and set up
the market for a further rally to the late April top at 1.5523.
Since the beginning of the month, following a string of
worse than expected U.S.
economic news, Forex investors have been selling the Dollar. Now, expectations
of robust earnings during the second quarter have shifted investor sentiment,
pressuring the Dollar even further. With 10-Year Treasuries hovering near
3.00%, investors are hungry for better returns and are flocking to the stock
market. Although economic reports have been poor, investor sentiment can be a
strong market driver.
After bearish fundamental events in Europe throughout the
Spring and concerns about Chinaâ€™s
growth, foreign investors see great opportunity in the U.S. markets without the high level of risk seen
in Asia and Europe. This could help trigger a
month long rally in U.S.
equities while sending the Dollar spiraling lower until at least the first week
Another key sign in the market on Tuesday was the turnaround
in the Euro following the downgrade of Portugalâ€™s debt. Although this
event may have been factored into the market, todayâ€™s turnaround served as a
sign that market participants are no longer easily rattled by bearish news. The
next however, will be the release of the European bank stress tests. Downside key
event, momentum may slow in the Dollar a few days leading up to the release of
this data, but it seems like it is going to take a blockbuster surprise to
derail the Euro at this time.
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Mon 10 Sep 2018 AA 08:30 GB- GDP, Trade, Output Tue 11 Sep 2018 AA 08:30 GB- Employment Decision A 09:00 DE- ZEW Survey Wed 12 Sep 2018 A 12:30 US- PPI A 14:30 US- EIA Crude A 18:00 US- Beige Book Thu 13 Sep 2018 A 1:30 AU- Employment AA 11:00 GB- Bank of England Decision AA 11:45 EZ- European Central Bank Decision A 12:30 US- Weekly Jobless AA 12:30 US- CPI Fri 14 Sep 2018 A 08:30 GB- GDP AA 12:30 US- Retail Sales A 13:15 US- Industrial Production AA 14:00 US- prelim University of Michigan
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