The recent attempt on former President Donald Trump’s life has sent ripples through Wall Street, affecting various sectors of the US equity markets. Despite the unsettling news, the week ended on a positive note, driven notably by a strong showing from the Russell 2000 index, which surged 6%. The Dow Jones and S&P 500 also posted gains of 1.59% and 0.86% respectively, though the Nasdaq saw a slight dip of 0.30%.
Market Impacts and Economic Indicators
Investor sentiment was notably influenced by economic data, including a lower-than-expected University of Michigan Consumer Sentiment index for July, dropping to 66 from June’s 68.2. This decline reinforces expectations for a potential Federal Reserve rate cut in September, particularly with inflation expectations easing to 2.9%.
Looking ahead, upcoming earnings reports from major players like Bank of America, BlackRock, and Netflix will be crucial in shaping market trends. Additionally, Tuesday’s retail sales data and an important speech from Fed Chair Powell on Wednesday will provide further insights into the economic landscape and future monetary policies.
What the Assassination Attempt Means for Markets
The attempt on Trump’s life has injected uncertainty into both political and economic circles. Speculation about his potential return to power has divided market views: while his policies could support fiscal measures and bolster markets, concerns linger about increased deficits leading to higher inflation and yields.
Moreover, a possible return of the Trump administration could escalate tensions with China, intensifying the trade conflict and its economic impacts. This unexpected development has cast a shadow over the upcoming US elections, adding complexity and volatility to market forecasts.
Technical Analysis: Nasdaq and S&P 500
From a technical standpoint, there’s a cautious outlook for the Nasdaq. Recent shifts away from tech stocks have sparked discussions about a potential deeper market correction. Key support levels at 20,150 and 20,000 will be critical in determining whether the index experiences a more significant pullback towards the 19,500/400 range. Meanwhile, the S&P 500 continues to hit record highs, driven by strong bullish momentum and resilient investor confidence.
In summary, amidst ongoing political uncertainties, US markets are cautiously optimistic. Economic data and corporate earnings updates continue to shape market sentiment. Investors should monitor key indicators closely for potential shifts in market dynamics in the coming weeks.
photo source: Google
By: Montel Kamau
Serrari Financial Analyst
15th July, 2024
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