News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Mixed
Wall Street
Mixed
Gold
Mixed
GBP/USD
Bearish
USD/JPY
Bullish
More View more
Real Time News
  • Currency exchange rates are impacted by several factors. Are different world leaders a contributing factor? Find out here: https://t.co/4jsORznRTE https://t.co/ZjrCYXTIdD
  • Many people are attracted to forex trading due to the amount of leverage that brokers provide. Leverage allows traders to gain more exposure in financial markets than what they are required to pay for. Learn about FX leverage here: https://t.co/BdgFmkRxVw https://t.co/dPE4AsJxqv
  • What are some trading takeaways from 2020, as we jump into the new year? Find out with your free guide here: https://t.co/e7udCTJlmf #DailyfxGuides https://t.co/9bsQkh2WMF
  • Trading Forex is not a shortcut to instant wealth, excessive leverage can magnify losses, and sentiment is a powerful indicator. Learn about these principles in depth here: https://t.co/lZFM8youtX https://t.co/DJccj3qiig
  • Risk management is one of the most important aspects of successful trading, but is often overlooked. What are some basic principles or risk management? Find out from @PaulRobinsonFX here: https://t.co/IsnpfJhp91 https://t.co/UK4E7wD6s8
  • Copper is on track to make a sixth consecutive monthly gain as prices inch towards its all-time high. The global backdrop remains supportive despite a short-term pause in the rally. Get your market update from @FxWestwater here:https://t.co/STEYeIG042 https://t.co/R794ENkS3c
  • Retail trader signals still hint that the Dow Jones and S&P 500 may be at risk, placing the focus on year-long rising trendlines to see if dominant upside biases hold.Get your market update from @ddubrovskyFX here:https://t.co/lFpzIFNmzW https://t.co/FoHTLDJWJe
  • The path for the Japanese Yen seems to favor the downside looking at a majors-based index. USD/JPY may rise within its Ascending Channel, but there is some scope for a healthy correction. Get your market update from @ddubrovskyFX here:https://t.co/7XFJiCYYEM https://t.co/KfLyB2t1jP
  • The British Pound’s recent slip lower against its major counterparts may prove short-lived. Key levels to watch for GBP/USD, GBP/JPY, GBP/CHF and EUR/GBP. Get your $GBP market update from @DanielGMoss here:https://t.co/Y48cF2qi9M https://t.co/ia3Bgq0ZTp
  • Senate Democrats reach deal on jobless aid -BBG
S&P 500 Forecast: Stocks Face Peril as Day of Reckoning Looms

S&P 500 Forecast: Stocks Face Peril as Day of Reckoning Looms

Rich Dvorak, Analyst

STOCK MARKET FORECAST – S&P 500, DOW JONES, NASDAQ TARGET RECORD HIGHS DESPITE UNEMPLOYMENT SOARING AND CHINA TENSION ESCALATING AS FLOYD PROTESTS TURN TO RIOTS

  • Stock prices have rebounded handsomely since mid-March as the S&P 500, Dow Jones Index and Nasdaq Composite recoil sharply back toward all-time highs
  • Market sentiment seems just shy of complete euphoria as investor complacency swells in response to the FOMC backstop and hopes for a V-shape economic recovery
  • Bullish equity investors blindly overlook threats from US-China tension escalating, double-digit unemployment rates still rising, and Floyd protests turning into riots

Stocks in the S&P 500, Dow Jones and Nasdaq have ripped higher by about 35% since bottoming mid-March. The relentless stock buying bonanza over recent weeks has propelled popular US equity benchmarks within striking distance of their all-time highs notched earlier this year.

Learn More – Differences Between the S&P 500, Dow, Nasdaq

For instance, the tech-heavy Nasdaq now rests a mere 1.3% away from its 18 February 2020 close at the 9,720-price level after an astonishing recovery from one of the sharpest stock market selloff in modern history. This compares to an equally impressive, though not as strong, rebound notched by the S&P 500 and Dow Jones, which trade about 9% and 13% below their record highs, respectively.

S&P 500 PRICE CHART WITH DOW JONES, NASDAQ OVERLAID: STOCK MARKET INDEX PERFORMANCE (31 DEC 2019 TO 01 JUN 2020)

sp500 price chart S&P 500 Forecast Stock Market Dow Jones Nasdaq Russell 2000

Chart created by @RichDvorakFX with TradingView

Unprecedented amounts of central bank liquidity and government stimulus have flooded markets to shore up sentiment and combat economic fallout from the coronavirus pandemic. An expanded FOMC arsenal, like the Fed backstop for high-yield corporate debt, combined with trillions of dollars in Treasury purchases, stand out as two overarching drivers that have fueled the eye-popping surge in stock valuations to levels last seen during the dot-com bubble nearly two decades ago.

US 500 BEARISH
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 1% -2% -1%
Weekly 8% -9% -1%
What does it mean for price action?
Get My Guide

This has largely allowed the S&P 500 Index to defy the gravitational pull lower from collapsing stock market earnings. The incredible comeback by stocks looks increasingly out of touch with reality, however, as investor complacency builds and unwavering risk appetite crushes volatility.

S&P 500 EARNINGS PER SHARE ESTIMATES FOR 2Q-2020 (% CHANGE)

S&P 500 Price Chart Stock Market Forecast EPS Estimate 2Q-2020

Chart Source: FactSet

In addition to S&P 500 EPS estimates freefalling, the number of unemployed grows by the millions every week, and layoffs do not look temporary on balance as job losses mount. Also, after spending months in lockdown to stop the coronavirus from spreading, which paralyzed the global economy and caused 1Q-2020 US GDP to collapse by a staggering 5%, Americans now gather by thousands amid violent protests over the death of George Floyd across major cities like Minneapolis, Los Angeles, and Chicago.

Traits of Successful Traders
Traits of Successful Traders
Recommended by Rich Dvorak
Traits of Successful Traders
Get My Guide

Not to mention, as US-China tension escalates in the wake of the coronavirus pandemic, Washington and Beijing have lobbed increasingly terse remarks back and forth over recent weeks, which also follows the alleged blow to Hong Kong autonomy due to the latest national security law imposed. Though details from the Trump-China presser last Friday revealed little appetite from the White House to impose fresh tariffs or scrap the phase one trade deal.

Learn More – A Brief History of Trade Wars: Timeline of Events Affecting Global Trade & Financial Markets

This provided a solid boost to stocks and other pro-risk assets like the Australian Dollar. The move might prove short-lived, however, considering reports over the weekend that Chinese officials, in a rebuke to Trump, told top state-run agricultural firms to shy away from purchasing American farm goods like soybeans.

Introduction to Forex News Trading
Introduction to Forex News Trading
Recommended by Rich Dvorak
Introduction to Forex News Trading
Get My Guide

Furthermore, the economic calendar indicates that several heavy-hitting data releases are expected this week, like PMI reports and nonfarm payrolls, which have potential to catalyze a deterioration in market sentiment. While increasingly less-horrendous data readings might provide a reason for optimism, and perhaps support higher stock prices, it is difficult to dismiss the fact that over 25 million Americans are unemployed and look past the secondary ‘domino effect’ on consumer confidence, savings, and consumption.

Top Trading Opportunities in 2021
Top Trading Opportunities in 2021
Recommended by Rich Dvorak
Get Your Free Top Trading Opportunities Forecast
Get My Guide

Correspondingly, while investors overlook the aforementioned bearish headwinds,S&P 500 price outlook seems progressively skewed to the downside as the stock market index fluctuates around astronomically high valuations. Stocks could continue marching higher, however, in light of the trending market and absence of a catalyst that carries enough impetus to ignite a reversal. Nonetheless, it seems increasingly likely the S&P 500 might succumb to a perilous fate if a day of reckoning dishes complacent investors a healthy serving of economic reality.

Read More – Stock Market Forecast: Should I Sell in May and Go Away?

-- Written by Rich Dvorak, Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES