Trade Setup Wednesday – US Stock Market News, U.S.-China trade, Home construction down

US Stock market News

US Markets took a rest today as stocks fell in a weak market scenario following highs of the past few days. This was led by weaker than expected results of Home Depot and economic data which did not do any justice in the last few months. The Dow Jones Industrial Average slipped to 33.97 points to 26,057.98  as important manufacturing companies, Caterpillar and Home Depot did not do well per the expectations. S&P 500 came down 0.1% to come close to 2,793.49 and the losses in the materials sector were offset by gains in the technology sector.

The NASDAQ Composite was a lower level of 0.7% at 7,549.3. The majority of these indices flitted between gains and losses throughout the day.

The important story so far was Federal Reserve Chairman Jerome Powell discussing issues that would drive the market and affect the economy in front of the overall Senate Banking Committee. His congressional testimony was viewed widely as he reinforced that the central bank has refrained from taking any further cuts due to economic data softening. He believed the job market was strong and there was an increase of the wages growth. However, this could become a contention for some members to raise rates to offset any potential inflation.

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Trade Setup for Wednesday

Important economic data such as MBA Mortgagee data as on Feb 22, Wholesale Inventories (December), Good Trade Balance (December), Durable Goods Order (January), Nondefense Capital Goods Orders ex Aircraft (January), Durable Goods order ex Défense (January), Durable Goods orders ex Transportation (January) will be released today.

  • The market will be digesting the Feb chief’s comments that the economy is “healthy” but along with the Fed also seeing “crosscurrents and conflicting signals”. The valuation of stocks looks good and there is expected to be an overall bull-run. There is a lot of value and investment waiting to come in. Slowing construction data will play a dampener as UBS cited slow growth in this sector.
  • Home-price appreciation also slowed in December to 4.7% annually, down from 5.1% in November, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index, the slowest pace since August 2015. The market will be digesting this as well.
  • The number of new homes under construction fell in December to an annual rate of 1.08 million, from 1.21 million rate in November, the Commerce Department said.
  • That is the lowest level since 2016.
  • On the bright side, the number of permits for new-home construction rose in December by 0.3% to an annual pace of 1.33 million.
  • January data on new home sales, originally set to be released Tuesday, will be delayed due to the earlier government shutdown.
  • investors have been focused on U.S.-China trade developments after Trump in recent days indicated that he was willing to extend a March 2 deadline for increasing tariffs on some $200 billion in Chinese goods.
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The market can expect all this new information to be part of the trade.

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