Stocks experience volatility due to crude oil downturn, underwhelming economic data and geopolitical tensions

Investor sentiment has been drawing cues from economic data and underwhelming inflation rates, which have seemed to work against the hawkish commentary from the Fed.  The Federal Reserve has an 2% inflation target, which has yet to be seen amidsts recent economic data. Other factors contributing to today’s movements is the drastic downturn in crude oil, as well as another escalation of geopolitical tension due to North Korea’s recent ballistic missile test.

Market participants are looking toward minutes from the Federal Reserve’s June 13-14 meeting, which will be released at 2 p.m. Eastern Time.

The DJIA is currently down 0.05%, or 8.74 points, at 21,471. The Nasdaq-100 is down 0.45% at 6,138 and the S&P 500 is currently trading at 2,431 which is up 0.08% from the open.

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows  incrementally building negative signals. Today’s negative vector figure of -0.14% progresses to -0.51 within three trading sessions. Today’s predicted support and resistance is 2,417.83 (± 3.79) and 2,443.32 (± 3.83), respectively. The predicted close today is 2,424.84. Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.   

Oil

Crude oil prices have turned sharply downward due to uncertainty around Russia’s participation in future OPEC production cuts. Russia has indicated that they would not participate in future OPEC-led cuts, which is rumoured to be under consideration currently. Although the global production cut deal made some gains in rebalancing the markets, and is expected to do more in that effort, Russia’s unwillingness to participate in future cuts may hamper that decision going forward.  West Texas Intermediate for August delivery is currently priced at $45.32 per barrel, down 3.59% from the open.  

Looking at USO, a crude oil tracker, our 10-day prediction model shows overall positive movement. The fund is currently trading at $9.62, which is down 3.07% from the open. Today’s prediction sees support at $9.61 (± 0.06) and resistance at $9.78 (± 0.06). The predicted close for today is $9.61. Vector figures show +0.71% for today, slowing to +0.10 and turning downward in four sessions before climbing again. Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.   

Gold

The price for August gold is currently up 0.33% at $1,223.20 a troy ounce. Investors are turning to the perceived safe-haven asset amidsts market volatility and geopolitical tension around North Korea’s recent ballistic missile test. Downbeat economic data has also contributed, but investors are looking toward the minutes from a June 13-14 Fed meeting for commentary and direction. More hawkish perspectives from the Fed may work to reverse a downtrend in the U.S dollar, otherwise investors will look toward non-yield-bearing assets like gold. Gold becomes less attractive to investors holding foreign currencies when U.S dollar is strengthened, as it is priced in that currency.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows initial downward movement followed by positive signals. The gold proxy is currently trading at $116.29, up 0.17% from the open. Today’s predicted low is $115.39 (± 0.30) and the predicted high is $116.76 (± 0.30). The predicted close today is $115.68. Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.   

Treasuries

Treasury yields are seeing little changes ahead of the Fed’s release of minutes from its June 13-14 policy meeting. Geopolitical tensions around North Korea have not had too much of an effect on the bond market either. Currently, market participants are focused on underwhelming inflation rates, compared to hawkish Fed outlooks. Economic data has so far been unable to verify the direction which Fed officials seem to anticipate. Investors will dump lower-yield bonds in this type of climate in order to purchase new bonds with higher yields. The yield on the 10-year Treasury note is currently down 0.76% at 2.34%. Bond prices and yields are typically inversely related to one another.

Using the iShares 20+ Year Treasury Bond ETF (TLT) as a proxy for bond prices in our Stock Forecast Tool, we see continued negative movement in our 10-day prediction window. Today’s vector figures move from -0.57% to -1.83% in three trading sessions.  The ETF is currently priced at $124.44- down 0.02% from the open. The predicted close today is $123.64 with a low and high of $123.14 (± 0.26) and $124.46 (± 0.26), respectively.  Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.

Volatility

The CBOE Volatility Index (VIX) is currently down 0.45% at 11.17, and our 10-day prediction window shows overall positive signals. The predicted close today is 11.52 with a positive vector of +4.81%. Today’s predicted lows and highs are 10.46 (± 0.29) and 12.94 (± 0.35), respectively. Prediction data is uploaded after market close at 6 p.m., CST. Today’s data is based on market signals from the previous trading session.