Commenting on the ongoing stimulus negotiations and today’s trading Gorilla Trades strategist Ken Berman said:
Major Indices Gain With All Eyes On The Ongoing Stimulus Negotiations
The major indices are sporting modest gains at midday following another very active morning session on Wall Street, with all eyes on the ongoing stimulus negotiations in Washington. Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi continue to push for a last-minute compromise following yesterday’s roughly $1.7 trillion counter-proposal from the Republicans. Despite the uncertain outcome of the talks, U.S. stocks continue to be much stronger than their overseas peers, as today’s economic data-dump confirmed that the recovery remains on track.
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The number of new jobless claims edged lower this week, still coming in well above 800,000, but continuing claims dropped by almost 1 million, falling below 12 million. The ISM manufacturing PMI slightly missed the consensus estimate, with a reading of 55.4, which still points to healthy growth in the sector together with the better-than-expected construction spending data. Personal spending was also above forecast and while personal income missed expectations, the stable Core PCE Price Index hints at healthy demand in the consumer economy.
Dow: 27,928, + 146 or 0.5%
S&P 500: 3,383 + 20 or 0.6%
Nasdaq: 11,288, + 120 or 1.1%
Russell 2000: 1,515, + 7 or 0.5%
Market breadth has been relatively weak this morning, with advancing issues outnumbering decliners by a 5-to-4 ratio on the NYSE at midday. 24 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 82 stocks hit new 52-week highs. The major indices have been trading below their daily VWAPs (Volume-Weighted Average Price) for most of the morning session, pointing to intraday selling pressure. The price of oil is down by over 6% at midday, which has been weighing heavily on the energy sector, with cyclical issues, in general, showing relative weakness, especially compared to the very strong tech sector, which propelled the Nasdaq to another two-week high. Stay tuned!