A number of positive news of a fundamental nature helped the major US stock indices last week to reach new absolute highs.
In addition to continuing to receive positive reports from a number of large US companies, investors continue to assess the success of the US presidential administration in the implementation of campaign promises, in particular, a tax reduction plan for US companies and US citizens.
Investors also continued to analyse the appointment of Jerome Powell to the post of head of the Fed. The term of office of the current head of the Fed, Janet Yellen, will expire in February next year. Trump said in a welcome speech:
In a short time we have achieved incredible successes: Unemployment is at the lowest level in 16 years. We have two quarters with an increase (economy) of 3% - this is a great achievement, and things are going better with every week.
Powell is considered a supporter of the actions of the current head of the Fed, Janet Yellen, and is determined to less aggressive tightening of monetary policy. In his opinion, the Fed's actions to raise interest rates "should be carried out gradually, while the development of the economic situation in the country roughly corresponds to expectations". The appointment of Powell is likely to mean continuity in the conduct of monetary policy.
In the US, investors also drew attention to data on the number of jobs outside agriculture - a key indicator of the state of the American economy. As the data showed, in October, 261,000 jobs appeared in the US, which exceeded the September figure, but was lower than the forecast of analysts. At the same time, this is one of the best values of the indicator for the last two years, although economists had expected that the number of jobs in the US in October increased by 315,000.
Also, the value for September was revised from -33,000 to 18,000 and in August to +39,000. If there were no revisions in October, the NFP change would be 351,000. This is a strong statistic.
In addition, the stock market and the dollar received additional support from the optimistic data on business activity in the services sector received from the ISM on Friday and data on production orders. So, the index of business activity in the services sector in the US was 60.1 in October (the forecast was 58.5, the previous value is 59.8), the volume of production orders increased by 1.4% (the forecast was + 1.2%, + 1.2% in August).
Nasdaq Composite rose 0.7% on Friday to 6764.44 points after Apple (NASDAQ:AAPL) reported Thursday the best quarterly growth in two years. The index reached the 63rd record level at the close in 2017, setting a new record for the number of historical highs in one calendar year. The Dow Jones Industrial Average rose 0.1% on Friday to 23539.19 points, while the S&P500 rose 0.3% to 2,587.84 points.
DJIA and S&P500 have grown for the eighth week in a row, which is the longest series for them in nearly four years. In addition, the indices this year for the 25th time together closed at record highs.
Of the news for today, it is worth paying attention to the speech of representatives of the Federal Reserve.
At 13:00 (GMT), Janet Yellen will deliver a speech, and at 17:00 - the head of the Federal Reserve Bank of New York, William Dudley. Their performances may affect the short-term trade in USD and US stock indices. It is likely that they will also speak in a positive light on the prospects for the US economy.
Support levels: 2573.0, 2547.0, 2480.0, 2430.0, 2405.0
Resistance levels: 2587.0
Trading recommendations
Sell Stop 2572.0. Stop-Loss 2592.0. Objectives 2547.0, 2480.0, 2430.0, 2405.0
Buy Stop 2592.0 Stop-Loss 2572.0. Objectives 2600.0, 2700.0
Disclaimer: Presented material express the personal views of the author and is not a direct guide to conduct trading operations.