Dow surpasses 20,000 for the first time amidsts high confidence in economic growth

For the first time in history, the Dow Jones Industrial Average breached the psychologically important 20,000 mark. This may begin to attract more investors and bring more attention to the markets, as the rally serves as validation for optimistic economic outlooks under a Trump administration. Notable components leading the index surge are defense contractors, financials and construction. The milestone has been met with mixed feelings. Bolstered confidence and rapid action in the form of executive orders have many looking toward Trump’s deregulation goals. Others see an inevitable future conflict between a pro-business agenda catering to corporate interests and a protectionist, populist stance on international trade and manufacturing.

The DJIA is currently up 0.70% at 20051.76, pushed by defense, construction and financial sectors. The Nasdaq is up 0.72% at 5641.30, boosted by technology stocks which have been lagging recently. The S&P 500 is currently trading at 2293.73 which is up 0.60% from the open, led by technology and financials. The index is within striking distance of the 2300 mark.

Using the ^GSPC symbol to analyze the S&P 500, our prediction model shows a reversal in light of the Dow event. Consistent positive vector figures hold throughout the prediction window, hovering just under 1%.  The predicted close today is 2292.49, with predicted support and resistance at 2268.87 (± 4.72) and 2295.24 (± 4.77), respectively.

Upcoming Events and Reports

President Trump announced a massive investigation into widespread voter fraud in the elections. Although recent studies have concluded with zero evidence of this occurring, Trump insists that millions of people voted illegally. There are no details as to how this investigation will be carried out, and already there is major pushback from both sides of the aisle. It is becoming increasingly apparent that President Trump’s words and subsequent administrative actions are to be evaluated separately from one another.

Oil

Crude oil futures have flipped between losses and gains today. The confidence in economic growth and large infrastructure projects, along with the psychological Dow barrier of 20,000 being breached, have many investors predicting higher demand. On the other hand, this is the third-straight week of rising U.S production figures. Efforts to cut production by OPEC and non-OPEC countries have countered this, but investors still remain skeptical. Currently, oil prices are up 0.09% from the open at $53.23.

Looking at USO, a crude oil tracker, our 10-day prediction model shows consistent negative movement around 1%. The fund is currently trading at 11.4, up 0.26%. Today’s prediction sees support at 11.32 (± 0.05) and resistance at 11.45 (± 0.05). The predicted close for today is 11.36.  

Gold

Investors are pulling out of the safe-haven metal to secure profits causing a slide in gold prices. Gold futures are currently down $13.10, or 1.08% today at $1200.50 a troy ounce. However, if the rally proves to be short-lived, and uncertainty returns around the Trump administration’s clarity on fiscal policy, be prepared to see the yellow metal recover.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows potential for slight recovery.  The gold proxy is currently trading at 113.92, up 1.17%. Today’s predicted low is 114.87 (± 0.24) and the predicted high is 115.97 (± 0.24). The predicted close today is 115.22.  

Treasuries

Bond prices are continuing their downturn, following a major sell-off on Tuesday, as confidence over policy outlook is reflected in the recent market rallies. The government bonds market has been erratic after a post-election surge which had investors anticipating rapid economic growth and inflation under Trump. Using the iShares 20+ Year Treasury Bond ETF (TLT) in our Stock Forecast Tool, we see negative vector figures climbing toward 2% within the next 10 days relative to today’s conditions.

TLT, an ETF which tracks 20+ year bond returns, is currently priced at $118.9942, which is down 1.09% from the open. The predicted close today is 119.44 with a low and high of 119.13 (± 0.20) and 120.31 (± 0.20), respectively.  

Volatility

The CBOE Volatility Index (VIX) is down 2.98% today at 10.74. The 10-day prediction window shows consistent increases, peaking around 9% midway through.  The predicted close today is 11.82. Today’s predicted lows and highs are 11.07 (± 0.14) and 12.21 (± 0.15), respectively.

Other news

Three major automakers saw premarket gains today, following reports that President Trump indicated his goal to cut down on environmental regulations and slash corporate taxes. General Motors (GM) is up 3.16% and Ford Motor Co. (F) gained 1.3%.

Boeing Co. (BA) has filed an earnings report that exceeded expectations for the final fiscal quarter of 2016. Shares have lept 4.72%, currently trading at $168.12.

United Technologies Corp. (UTX) reported flat revenue growth, but indicated a positive outlook for this year. Shares are currently down 0.97%.