STOCK MARKET OUTLOOK: S&P 500 INDEX HITS NEW RECORD AS BIDEN, SENATE REACH INFRASTRUCTURE DEAL
- The S&P 500 Index is on pace to close at a new all-time high as stocks gain ground
- S&P 500 price action putting in a strong session with news of an infrastructure deal
- President Biden tweets that a bipartisan infrastructure agreement has been reached
The S&P 500 Index is pacing a 0.6% gain on Thursday and looks set to close at a fresh record high. Stocks have bounced back notably since investors threw a minor tantrum over the threat of Fed tapering last week. This seems to follow FOMC officials like Chair Powell downplaying rate hike risk in his recent congressional testimony.
Volatility has correspondingly normalized, which in turn, appears to be helping risk appetite recover and push stocks back higher. Another bullish catalyst likely propelling S&P 500 price action is President Joe Biden announcing that a bipartisan group of ten senators have come together to forge an infrastructure agreement.
PRESIDENT BIDEN ANNOUNCES INFRASTRUCTURE DEAL HAS BEEN STRUCK
Republican senator Susan Collins stated that a deal has been reached for the price tag and scope of President Biden’s infrastructure package. Biden acknowledged in a tweet announcing the agreement that he expects the infrastructure deal to create millions of American jobs. It is said that the infrastructure plan agreed upon will cost roughly $560-billion. Congressional leaders have agreed to hold votes on a bipartisan infrastructure package in addition to having a budget resolution that fast-tracks the rest of President Biden’s $4-trillion infrastructure package sometime in July.
S&P 500 INDEX PRICE CHART: DAILY TIME FRAME (18 FEB TO 24 JUN 2021)
Chart by @RichDvorakFX created using TradingView
The market’s reaction to the infrastructure agreement announcement sees the S&P 500 and other major stock indices like the Dow Jones and Nasdaq extending their advances to session highs. S&P 500 price action currently trades at its upper Bollinger Band near the 4,270-level. Follow-through into the end of the week could prime stocks for an extended breakout to subsequent all-time highs. That said, high-impact event risk posed by the upcoming release of monthly PCE inflation data could spoil the rally by stocks if the data is reported materially hotter-than-expected.
| Change in | Longs | Shorts | OI |
| Daily | -5% | 3% | 0% |
| Weekly | -15% | 29% | 6% |
-- Written by Rich Dvorak, Analyst for DailyFX.com
Connect with @RichDvorakFX on Twitter for real-time market insight
