Cooler Inflation Boosts Stocks
US stock markets are racing higher this week as traders react to better-than-forecast US data. Following a heavy correction lower at the start of the month, the S&P has now fully reversed those losses and is back in the green for August. Earlier this week, US inflation was seen falling again last month with annualised headline CPI cooling to 2.9%, below the prior and expected 3%. The data has kept the focus on near-term Fed easing expectations with some players now looking for the Fed to cut by a larger .5% in September, deeper than the .25% most expect.
Recession Fears Fade on Better Retail Sales
Following that data, yesterday we saw July retail sales data coming in better than forecast. Headline sales printed 1%, up from -0.2% prior and well above the 0.4% the market was looking for. Similarly, core retail sales printed 0.4%, above the 0.1% the market was looking for. The data comes at a time when US sentiment has been rocked by recession fears and has helped reassure traders that the US should avoid a technical downturn. In particular, strong consumer discretionary spending serves as a good counter-argument to those warning of a recession and has helped feed into bullish stock sentiment this week.
Technical Views
SPX
The rally in the S&P has seen the market breaking back above the 5,502.19 level and back above the broken bull channel lows. With momentum studies bullish here, the focus is on a continuation higher with 5,677.97 the next objective for bulls.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.