- Summary:
- Futures of the S&P 500 index declined as investors reacted to the news that senate and the White House had agreed on the biggest stimulus package in history
The S&P 500 index is set to open lower in a classic case of buying the rumour, sell the news situation. At 1200 GMT, S&P 500 futures were down by almost 1%.
The S&P 500 index rose by as much as 10% yesterday as traders braced themselves for the biggest stimulus package in history. News of the news came late at night when most Americans were asleep. The new deal will see many adult Americans receive a $1,200 check. Small and medium-sized companies will receive funds as part of a $300 billion fund. Meanwhile, big companies like Boeing and United Airlines will get funds from a $500 billion package.
Most companies in the US have suffered as Coronavirus has made it impossible for them to do business. For example, airlines have suffered after the Trump administration banned flights from Europe. Restaurants have been in trouble as most cities remain vacated. Cruise lines like Carnival and Royal Caribbean have parked their vessels.
US Mortgage Applications Tank
In addition to the news from Washington, traders reacted to news by the Mortgage Bankers Association. The data showed that the weekly mortgage applications dropped by more than 29%, which is the slowest pace of growth in years. This happened as most buyers remained wary of committing to mortgages in times of crisis. The average 30-year mortgage rate rose from 3.74% to 3.82%.
Meanwhile, durable goods order numbers for February were better than expected. The headline orders rose by 1.2%, which was better than the expected decline of 0.8%. The core durable goods orders declined by 0.6% in February after rising by 0.6% in January.
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S&P 500 Index Technical Analysis
Looking at the hourly chart, we see that the index is set to open on the same level as its closing candle yesterday. We also see that the 25-day and 50-day exponential moving averages are attempting to crossover. Meanwhile, the RSI has moved from the oversold level and is pointing upwards. We also see that the pair is along the 78.6% Fibonacci Retracement level. I expect the index to continue yesterday’s rally that will see it test the important resistance level of $2600.