Bears Gaining Edge over Bulls at the Wall Street

After bulls driving the Dow Jones Industrial Average (DJIA) continuously for 23 sessions since January, it’s finally that bears got into the driving seat for back to back two days. The geopolitical conditions that took place over the weekend along with President Trump’s allegation on Barack Obama led to Dow opening weak on Monday and also closing in negative.

These weekend developments continue to weigh on the investors’ minds on Tuesday too resulting in low trade volume. All the major indices were trying to get over it in the afternoon session, but did not succeed. The lack of interests by the traders led to indices closing in red again on Tuesday.

At the closing on Tuesday, the DJIA fell by 0.24%, while the SPX (S&P 500 Index) and the NDX gave up 0.33% and 0.25% respectively. The market breadth was decisively negative with every 2 shares trading in negative to 1 in positive. Although the ROC (10)’s declined, it remained in positive territory for all the three major indices of the Wall Street.

The worst affected sector on the SPX was the energy sector, which contributed to the maximum decline in the index. The drug makers seem to be under immense pressure after the tweets of President Donald Trump and the new health insurance proposal from the House of Republicans. If we see the data front of the trade deficit, it reached its multi-year high and the consumer borrowing also rose by its smallest margin in last five years.

In the remaining week, the markets are expected to remain weak in volume. Dow Jones is at record levels and nearly in overbought territory and hence a slight pullback is expected. The markets are now expected to take fresh cues from the employment numbers that are coming on Friday and the Fed meeting that is due next week.

The chief executive of Ideal Asset Management in New York, Rahul Shah said – “As long as we keep getting macroeconomic data that’s supportive of a rate hike we’re going to continue to see stocks rally. If financials continue to rally with higher rates and industrials rally with better economic data that could be enough to power the market higher.”

The markets are quite optimistic about the fed rate hike happening next month. As the investors made room for the government’s debt supply this week the US Treasury yields rose thereby supporting the dollar.

 

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