DJ 30 SNAPS LOSING STREAK ON POSITIVE FED & TECH STOCKS
Dow Jones 30 futures are currently trading at 26517- higher by 0.40% as compared to the last closing. However, the index futures have been closed in the red over the last 5 trading sessions.
Apple led tech stocks higher on Thursday. The stock jumped more than 2% after J.P. Morgan initiated coverage of the stock with an overweight rating. The investment bank raised its ratings after expectations of strong growth in Apple’s service offerings.
Among the top gainers in the Dow Jones, Walgreens rose 1%, Microsoft advanced 0.6% and Visa rose 0.7% at the time of writing. McDonald and Nike advanced 0.7% each at the time of writing.
On Wednesday, the Federal Reserve raised the benchmark overnight lending rate by a quarter of a percentage point to a range of 2.00% – 2.25%. The Federal Reserve also removed the word “accommodative” from its policy statement. The removal of the word should be taken as an indication that the economy is performing as expected, emphasized Fed Chairman Jerome Powell during the news conference. This indicates a higher growth trajectory for the economy which implies stronger earnings & growth for the frontline stocks that are part of DJ 30.
On the Economic front, US Q2 GDP growth rate (final reading) released on Thursday came in at 4.2%. The reading was in line with expectations. The economy grew at a 2.2% pace in the January-March(Q1) period. Durable Goods Orders for August (MoM) also scheduled for Thursday came in at 4.5%. The Orders rose more than the expectation of 1.9%. In the previous month, orders fell by 1.2%. Core PCE prices (Q2) also out on Thursday came in at 2.10%. PCE prices rose more than market expectations of 2.00%.
On the technical front, the RSI is currently at 62.92% and suggests that the market can move in the upward direction. The current price is above the MA20. The current price is above the middle line of the Bollinger bands and is heading upwards.
So, the overall market setup seems to be positive. Short-term trades can be initiated with tight Stop Loss and Profit targets.
Trade Suggestion-Limit Buy at 26500. Take Profit at 26640. Stop Loss at 26430.