Time To Buy S&P 500 Index – Bright Spots In US Economy Supportive
S&P 500 shares shook off early weakness on Wednesday (6/7), finishing higher, with encouraging signs within the US services sector, and a surge in healthcare and tech stocks.
Data released on Wednesday (6/7) showed signs of underlying strength in the U.S economy. According to the Institute for Supply Management, the Non-Manufacturing purchasing managers index rose by 3.6% to 56.5 in June, from the figure of 52.9 in May. This was the highest reading since November 2015. Key components of the index also gained ground. The new orders sub-index in June registered at 59.9, up 5.7% compared with 54.2 in May. Employment grew to 52.7 after a contraction to 49.7 in May. A sub-index for export orders rocketed by 4.0 %, swinging back into expansion territory.
S&P 500 shares experienced a sharp overnight gain with 128 stocks down, 4 unchanged, and 373 up. The best performers were the healthcare and technical sectors. Gainers included healthcare shares Gilead Sciences and Celgene, which won 2.4% and 4.3% respectively. Technology shares that rose significantly consisted of Facebook with 2.4 %, Cisco Systems with 1.4%, and Apple with 0.6%.
Furthermore, a recent study by the Department of Labor’s Bureau of Labor Statistics predicted the health care and technical sectors to be two fastest-growing employment sectors in the near future. They are expected to generate more than 2.3 million jobs over the next eight years. Labor force expansion shows long-term potential for growth in these two sectors.
Yesterday, the minutes from the Federal Reserve’s june meeting were published, shedding little light on the timing of the Fed’s next interest rate hike. The minutes also indicated that there would be hardly any interest rate increases until the policymakers were able to digest the effects of Britain’s exit vote and any possible global fallout. Dovish policy indications from the Fed led the Dollar Index lower – which was down 0.14% to 95.96.
The non-farm payrolls report on Friday (8/7) will provide crucial insights into U.S economic health. Markets are expecting an increase of 174,000 employed people after a shocking reading of only 38,000 new jobs created in May.
Fig. S&P 500 H4 Technical Chart
On the H4 chart, the price has rallied to the level of 2098.83. RSI is moving up to 57.8099, suggesting that the bullish trend is gaining dominance. The price movement is staying above the moving average, and the price is anticipated to climb further as a result. Additionally, the trend indicator encourages a long position with the green band crossing over beneath the price since June 30, 2016.
Buy stop at 2100.13, Take profit at 2104.33, Stop loss at 2198.27