U.S. stocks were mixed last week. The blue chip Dow was unchanged, the bench mark S&P 500 was marginally lower and the technology-based NASDAQ Composite dropped by about 2.0%.
The price action was primarily driven by bullish news from the Fed that
supported the financial services sector. The Federal Reserve’s annual stress test showed that all 34 U.S. banks that were tested maintained capital ratios above the Federal Reserve’s minimum required level.
The bearish news that limited gains and pressured prices was that Senate Republicans delayed a vote on healthcare reform. This drove stocks sharply lower as it was another blow to the Trump Administration’s economic agenda.
Continuing rotation out of major technology stocks such as Facebook, Apple, Amazon, Netflix and Alphabet, Google’s parent, continued to weigh on the NASDAQ.
In the cash market, the Dow Jones Industrial Average closed at 21,349.63, down 0.2%. For the year, the Dow is up 8.0%. The S&P 500 Index finished at 2,423.41, down 0.6%. It’s up 8.2% for the year. The NASDAQ Composite settled the week at 6,140.51, down 2.0%. It’s up 14.1% for the year.
The energy sector also performed well last week. It was supported by rising crude oil prices. Short-covering and profit-taking in the crude oil market were supported by a drop in U.S. production and the news of a drop in the rig count.
Forecast
This week is a holiday shortened week. Volume is expected to be low on Monday ahead of Tuesday’s U.S. bank holiday. The U.S. Non-Farm Payrolls report is Friday so it is possible that volume will remain on the low side all week.
Traders have to be ready for anything. Low volume can cause limited price action and it can allow a few traders to control the price action especially in the futures markets. I suspect we’re going to see a choppy, two-sided trade throughout the week.
On June 27, stocks sold off late in the session after Senate Republicans delayed a vote on their Obamacare replacement bill until after the July 4 recess. Since the Senators return on July 11, there will be no vote this week.
This week, investors will get the opportunity to react to reports on ISM Manufacturing PMI, ISM Non-Manufacturing PMI, the Fed Meeting Minutes and U.S. Non-Farm Payrolls.
Traders should also watch the price action in the crude oil market. Rising crude oil prices could help boost energy stocks which would provide support for the Dow Jones Industrial Average and the S&P 500 Index.
This article was originally posted on FX Empire