Dow Jones futures point to a positive start as the risk-on sentiment continues to drive the stocks to record highs. The shift to Feds policy announced the previous week had sparked a rally in equities, with Nasdaq and S&P 500 hitting consecutive record highs.
Upbeat manufacturing data yesterday showed that the economy is gaining momentum after the coronavirus lockdown. The ISM Manufacturing PMI came in at 56, beating the estimates of 54.5 in August. The ISM Manufacturing Employment Index reported at 46.4 topping the forecasts of 45.8 in August while the New Orders Index increased to 67.6 well above the estimates of 53.5. However, the Markit Manufacturing PMI came at 53.1 below the forecasts of 53.6 in August.
Focus on ADP Report
The economic calendar today includes the factory goods orders and the final look at July durable goods orders. The ADP private-sector jobs estimate it is the main event of the day, and analysts expect about 950,000 new jobs and a revision higher to July’s 167,000 figure. The EIA Crude Oil Stocks change for the week August 28 will be released at 14:30GMT.
Among the top gainers in Dow Jones, yesterday was Walmart which announced a membership service that will offer free shipping of goods for orders above $35. The service will compete with Amazon Prime, which does not have a minimum order. Apple finished 3.98% higher at 134.18 while Salesforce.com ended 3.45% higher at 281.25.
Fear and Greed Index Hits Extreme Greed Level
The fear and greed index climbed to 77 and has entered the greedy territory as the S&P 500 and Nasdaq make consecutive all-time highs. Investors ignore the mixed signals from the U.S. economy that shows that the recovery is not as fast as expected and bet on new stimulus by the government and extra liquidity from the Fed.
Dow Jones Daily Technical Analysis
Dow Jones index ended 0.76% higher yesterday at 28,645 approaching all-time highs at 29,568. The index has returned to gains for the year as the last month has added 6.77%. The outlook for the Dow Jones index is bullish and point to further gains, but the overbought levels suggest a slower pace of advance towards the 29,000 mark.
Minor resistance for the index is at 28,659 the top from yesterday, while the next hurdle would be met at 28,740 the high from August 28. If the bulls break that resistance then the next supply zone stands at 29,161 the high from February 21 which will also close the gap down from the beginning of the coronavirus sell-off.
On the downside, initial support for the index would provide the yesterday’s low at 28,290. Buying interest would emerge at 28,043 – 28,000 zone the low from August 24. A break below might challenge 27,491 the low from August 20.
Dow Jones Daily Chart