Dow Jones
The Dow Jones index hit another milestone yesterday with a close above the 30,000 level for the first time ever. The Dow industrial index was 454 points higher (1.5%) and closed at 30,046.
Stock markets are still being supported by the emergence of vaccine candidates and yesterday saw investors buoyed by the expectation of a peaceful transition of power in the U.S. election. President Trump instructed the GSA to begin the process of transition with Democrats as they normally would, which led to the media calling this a concession. Later tweets by the President said that the move would not affect his legal proceedings with the cases now moving to the Supreme Court. U.S. attorney and Federal Prosecutor Sidney Powell has launched a separate case against the State of Georgia, where a win would affect the important January Senate run-off. The election is not clarified yet and the market is pricing-in a Biden win with complacency setting in. This could lead to fireworks in December. Despite this, the move higher in the Dow is encouraging for the index because it was the tech stocks that pulled markets higher throughout the year and the Dow’s ascension could signal that a broader rally is carrying the stock market higher into year-end.
If Biden were to succeed then traders were happy to see he had picked the dovish former Federal Reserve Chair Janet Yellen as his pick for treasury secretary. The move would be seen as installing a candidate that supports the current status quo of fiscal stimulus and monetary policy, while she would likely take a back seat to issues of trade and American policy. Yellen, who became the first woman chair at the US Federal Reserve, would also set a new milestone as the nation’s first female treasury secretary. In a recent interview the economist was positive about the stimulus packages and said that consumers needed the support. This is another sign that a Democrat White House would bring a large stimulus spending package, alongside their green aspirations and this is seeing a slump in the U.S. dollar. The decline in the greenback is another support for stocks.
The Dow was able to shrug off weaker-than-expected figures for consumer confidence with a reading of 96, compared to 98.2. This was much lower than the previous month’s 101.7 but the virus situation has worsened and traders are looking beyond the short-term sentiment indicators for now. Today will see a raft of high-level data releases with durable goods orders, a Q3 GDP update, Michigan consumer sentiment and PCE inflation figures. These will be followed by the release of FOMC meeting minutes so there is the potential for volatility and price swings in the U.S. session. The Fed minutes are unlikely to show anything new as the bank are happy with the current monetary policy and also has a grip on inflation.
The Dow Jones has closed above the 30,000 level and this leads to the possibility of further gains ahead. The 29,585 level was the February pre-virus highs and this would be the first support level going forward. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.
