Markets Stop Short Of A Third Straight Day Of Gains

Markets have had a softer open this morning following two straight days of gains, the first time this has happened since February. At present, these 1.5-2% losses are far less severe than we have seen in recent weeks.

In the early hours of the morning the US Senate survived a protest vote by some Republicans to pass the enormous fiscal stimulus legislation. The upper chamber voted through the bill by 96 to 0, with the stimulus package now moving to a vote in the Democrat-controlled House of Representatives on Friday. If this passes as expected it can be signed and enacted by US President Donald Trump. However, while investors will be relieved to see the bill continue to make progress, all eyes will now be on US initial jobless claims data on Thursday morning — which we’ve covered in more detail below.

From a technical point of view, on the hourly chart of the S&P (SPX) we can see that the 20 hour moving average (orange) has been rising support for much of the rally we have seen since the start of the week, however, this was breached overnight. The index is now testing the 50 hour (red) which could see the price bounce off the level, or if it breaks we could be taking another leg lower.

However, in a daily time frame, the recent two day surge stopped short of troubling the 20 day moving average (orange). The 50 day moving average (red) is also very close to crossing over the 200 day (green), which is known as a ‘death cross’ and can be a bearish signal. We saw this happen prior to the significant sell off at the end of 2018.

Boeing pushes aerospace sector higher, while Nike’s online growth helps it beat virus disruption

The industrials sector posted the best Wednesday out of the 11 sectors that make up the S&P 500, according to data from Fidelity, with aerospace and defence the top performing subsector gaining 11.1%. Boeing (BA) was a significant contributor, gaining 24.3% as the stimulus deal includes support for the aviation industry. The bill includes $17bn in loans for businesses considered “critical to maintaining national security,” which according to Washington Post sources is intended to meet Boeing’s needs — although the firm has stated publicly that it can survive without a taxpayer bailout. CEO David Calhoun has made it clear that he would not accept having to give the federal government an equity stake in return for assistance and would look at other options if it came to that. 

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