Mixed earnings reports and sparse economic data cause indexes to trade lower as investors behave cautiously

In the absence of upcoming reports and economic data, investors are turning to signals from the U.S political scene. President Trump is expected to submit a preliminary budget proposal soon, which is technically required for the first Monday of February. The process can be delayed, but investors are looking forward to seeing this in the near future. Although the budget proposal would not be set in stone, it would serve as a welcomed series of indicators for the administration’s broader vision and goals.

The VIX has jumped 7% and bonds are seeing a slight surge as investors turn to more protective strategies. Bank shares have seen gains, however, following news that President Trump intends to pull back on the Dodd-Frank law, which regulates and restricts lending activity.  

The Dow is hovering just above the 20,000 mark but seeing mostly sideways action. The index is up 0.01% from the open at 20073.21. The Nasdaq-100 is down 0.09% at 5661.01.  The S&P 500 is currently trading at 2294.13 which is down 0.14%  from the open.

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows slight but consistent downward movement. Relative to today’s conditions, the predicted negative vector figures climb to 0.70% and then decrease by the end of the 10-day window.  The predicted close today is 2294.55, with predicted support and resistance at 2279.29 (± 3.24) and 2297.70 (± 3.26), respectively.  

Upcoming Events and Reports

The Ninth U.S Circuit Court of Appeals will be next in handling the controversial travel ban signed by President Trump. The constitutional and statutory integrity of the executive order is disputed by several state attorneys and has been suspended by a federal judge in Seattle. A federal appeals court has refused to rapidly reinstate the ban. Over 100 CEO’s from major technology companies, including Apple, Alphabet, Facebook and Microsoft, are participating in a joint amicus brief to be filed in court in an effort to fight the immigration restrictions. Technology companies rely on international talent and the travel ban will disrupt routine operations.  

Investors and corporations are feeling uncertainty around sparse details for the Trump administration’s economic and fiscal policy. The political capital expended on rapid-fire executive orders, rather than pro-business agendas and infrastructure spending, has some analysts predicting more erratic behavior and lack of clarity. Deregulation, infrastructure projects and fiscal policy will come eventually, but markets need to adjust how they digest news from Trump’s non-traditional leadership style.

Oil

Crude oil futures have slipped again as investors remain wary of rising U.S production levels, coupled with a strengthened U.S dollar. Losses were offset by news of declines in other major producers, as well as indications that the Trump administration will be rolling back restrictions in this industry. Currently, March West Texas Intermediate crude prices are down 0.91% from the open at $53.33 per-barrel.

Looking at USO, a crude oil tracker, our 10-day prediction model shows a potential rebound. The fund is currently trading at 11.44, down 0.87% from its open. Today’s prediction sees support at 11.35 (± 0.04) and resistance at 11.60 (± 0.04). The predicted close for today is 11.56. Positive vector figures in the 10-day window climb from 1% to nearly 3%, relative to today’s conditions.  

Gold

Gold futures are up today as the perceived safe-haven metal proves attractive to investors amidst choppy index movements and mixed earnings reports. After solidifying gains last week, prices oscillated today but are currently up 0.80% at $1230.50 a troy ounce.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows sustained upward movement relative to today’s conditions. Positive vector figures climb from under 1% to above 3% within the next 10 days.  The gold proxy is currently trading at 117.08, up 0.82%. Today’s predicted low is 116.08 (± 0.25) and the predicted high is 116.91 (± 0.25). The predicted close today is 116.51.  

Treasuries

Treasury bond prices are rallying and yields are dropping, mostly attributed to European political activity and concerns. German bonds recently rallied as new polls show France’s political climate currently favoring Marine Le Pen. Le Pen is a far-right candidate who is proposing an exit from the European Union, which would rock the trading bloc and critically harm the euro.

Using the iShares 20+ Year Treasury Bond ETF (TLT) in our Stock Forecast Tool, we choppy movement in bond prices. Relative to today’s conditions, we see vector figures flipping from negative to positive in two-session blocks. The magnitude of change for these oscillations is slim, remaining well under 0.50%. The ETF is currently priced at $119.53, which is up 0.44% from the open. The predicted close today is 118.14 with a low and high of 117.78 (± 0.20) and 119.63 (± 0.20), respectively.  

Volatility

The CBOE Volatility Index (VIX) is currently up 2.19% at 11.21 after spiking to 11.70 earlier today.  The 10-day prediction window shows initial downward movement followed by consistent positive movement. After five days out, positive vector values climb toward 12% and retreat again. The predicted close today is 10.33 with a negative vector of -3.92%. Today’s predicted lows and highs are 10.17 (± 0.20) and 12.12 (± 0.24), respectively.

Other news

Hasbro Inc. (HAS) shares rocketed almost 15% today following outstanding earnings reports with better-than-expected profits and sales. The movement may turn out to be the biggest single day increase the company has seen in 20 years.

Tiffany & Co. (TIF) saw its share price drop 2% following news of its CEO, Frederic Cumenal, stepping down over the weekend. Cumenal had spent 22 months in this role.

Tyson Foods (TSN) is seeing a rise in shares of nearly 2% after positively adjusting its annual outlook following first-quarter earnings which beat expectations.