Morning Brief
Headline News:
Equity futures point to a modestly higher opening this morning after the major averages finished little changed on Thursday, though the indices captured gains of 3.0% or wider for the week.
Last week’s rally was supported by optimism that a ceasefire could be reached between the U.S. and Iran, as well as by commentary from Fed Chair Jerome Powell, who noted that inflation expectations remain well anchored in the near term.
Developments on the geopolitical and energy fronts continue to drive headlines this morning, with Axios reporting that the U.S., Iran, and mediators are discussing a 45-day ceasefire agreement that could end the war, though sources say the chances of a deal are slim.
President Trump said that if a deal is not reached by the Tuesday deadline, Iran will face a new wave of attacks against infrastructure sites.
Crude oil is down modestly to around $110 per barrel, though Bloomberg reports that Iran has rejected opening the Strait of Hormuz as a part of any ceasefire deal.
Elsewhere, corporate news flow is once again on the lighter side, coming off the long weekend, with Q1 earnings season looming ahead.
The 10:00 a.m. ET release of the ISM Services PMI (Briefing.com consensus 54.9%) is the only economic data release of note on today’s calendar.
(Michael Gibbs, Managing Director, Lead Portfolio Manager |)
Markets:
The S&P 500 pushed through resistance at 6,574.32, closing at 6,582.69 and finishing just below the key 20-day moving average at 6,607.84. While the RSI was flat on the session, the Advance-Decline line continued to trend higher, suggesting improving market breadth beneath the surface.
So far this morning, S&P 500 futures are little changed, indicating a more neutral open. Meanwhile, Brent crude oil remains elevated at $108.42 per barrel, continuing to act as a macro headwind. As long as oil holds above $100, it is likely to pressure equities and limit upside momentum.
Given the recent move off the lows and the index’s proximity to the 20-day moving average, today’s session could see the index trade in a tighter range as it consolidates gains and builds a base for a potential next move higher.
John N. Lilly III CPFA
Accredited Portfolio Management Advisor℠
Accredited Asset Management Specialist℠
Portfolio Manager, RJFS
Partner, DJWMG
Windsor Wealth Planners & Strategists
Futures trading is speculative, leveraged, and involves substantial risks. Investing always involves risk, including the loss of principal, and futures trading could present additional risk based on underlying commodities investments.
The Relative Strength Index (RSI), developed by J. Welles Wilder, is a momentum oscillator that measures the speed and changes of price movements.
The percentage of stocks trading above a specific moving average is a breadth indicator that measures internal strength or weakness in the underlying index. The 50-day moving averages are used for short-to-medium-term timeframes, while the 150-day and 200-day moving averages are used for medium-to-long-term ones. Signals can be derived from overbought/oversold levels, crosses above/below 50%, and bullish/bearish divergences.
The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represents approximately 8% of the total market capitalization of the Russell 3000 Index.
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. Past performance may not be indicative of future results. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investors’ results will vary. Opinions expressed are those of the author, John N. Lilly III, and not necessarily those of Raymond James. “There is no guarantee that these statements, opinions, or forecast provided herein will prove to be correct. “The information contained was received from sources believed to be reliable, but accuracy is not guaranteed. Investing always involves risk, and you may incur a profit or loss. No investment strategy can guarantee success. The charts and/or tables presented herein are for illustrative purposes only and should not be considered as the sole basis for your investment decision. International investing involves special risks, including currency fluctuations, different financial accounting standards, and possible political and economic volatility. Investing in emerging markets can be riskier than investing in well-established foreign markets.
This is not a recommendation to buy or sell any company’s stock mentioned above.
US government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. US government bonds are issued and guaranteed due to the federal government’s timely principal and interest payment. Bond prices and yields are subject to change based on market conditions and availability. If bonds are sold prior to maturity, you may receive more or less than your initial investment. Holding bonds to term allows redemption at par value. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall, and when interest rates fall, bond prices generally rise.
The Nasdaq 100 (^NDX) is a stock market index made up of 103 equity securities issued by 100 of the largest non-financial companies listed on the NASDAQ. It is a modified capitalization-weighted index. It is based on exchange and not an index of U.S.-based companies.
The Russell 2000 Index is a stock market index that measures the performance of the 2,000 smaller companies included in the Russell 3000 Index. It is managed by London’s FTSE Russell Group and is widely regarded as a bellwether of the U.S. economy because it focuses on smaller companies that focus on the U.S. market.
The NYSE advance/decline measure refers to the number of common stocks listed on the New York Stock Exchange (NYSE) that close at a higher price than their previous closing price (“advancing issues”) compared to the number of NYSE-listed common stocks that close at a lower price than their previous closing price (“declining issues”) during a specified trading session.
This measure is used as an indicator of market breadth and reflects the extent to which price movements are broadly distributed among NYSE-listed securities.