US stocks rise as traders await Powell speech

Summary:

• Green across the board for US indices ahead of the NA session

• US GDP in line with forecasts at 3.5%

• Fed chair Powell speaks at 5PM

Despite the chances of a breakthrough on trade between Trump and Xi later this week looking increasingly unlikely, US markets seem to be in a fairly buoyant mood with gains seen across the board. In terms of economic release the economic growth numbers often attract a lot of attention but they aren’t usually that market moving for stocks. This afternoon we got the Q3 advance (second of three readings) US GDP which showed impressive growth of 3.5% - as expected. This was also inline with the first reading and while it represents a bit of a drop on the 4.2% seen in Q2 it is still well above the 2.2% seen in the first quarter and seen as high compared to its peers. While the personal consumption for the period of 3.6% is pretty strong, it does represent a bit of a drop on the 3.9% expected and the 4.0% initial reading.   

The latest growth figures from the US showed that the world’s largest economy continued to perform well in Q3, with growth of 3.5% largely driven by personal consumption and investment. Source: XTB Macrobond

The US100 is the biggest rise, as has been the case quite often of late and the market has run back into the 6765 level. This region had previously acted as support but once it was broken to the downside just over a week ago it caused a large move lower. Fib retracements of the drop from the high at 6960 reveal this the 6765 level is the 61.8% fib and could be seen as an important possible resistance to watch this afternoon. If price fails to get above here then the recent rally will come under threat with possible support found around the 50% or 41.4% fibs at 6704 or 6660 respectively. A break above though would be a clear positive sign and open up moves to the 78.6% at 6850 and ultimately possibly even the 100% at 6960.

The US100 is back at the 6765 level it broke lower from just over a week ago and how price reacts here could prove key. The level also coincides with the 61.8% fib of the larger decline. Source: xStation    

While the US100 is probing potential resistance at the start of the US session the US500 made a potentially decisive break overnight when price cleared the 2676-2684 region. This zone had provided a ceiling for the market in the past week but the clean move above it has changed the outlook which now appears more positive. 2710 and the region from 2740-2748 are possible targets for longs while the prior resistance region from 2676-2684 could now be seen as potential support.

The US500 made a promising break above the 2676-2684 region overnight and as long as price doesn’t move back below there then further gains may lie ahead. Source: xStation

Looking ahead to the rest of the session the speech from Jerome Powell is a potentially big event with traders no doubt keen to see if the Fed chair reveals any insights ahead of next month’s FOMC meeting. Powell has been criticised from President Trump recently for his seeming persistence to increasing rates saying that he was not even “a little bit” happy with him.  Trump, who has repeatedly criticized the Fed for its interest-rate increases, complained at length about Powell in during an interview with the Washington post saying the central bank’s policies are responsible for recent stock market declines while also blaming them for GM’s announcement this week that it would close five factories in North America and lay off 14,000 workers next year. “I’m doing deals and I’m not being accommodated by the Fed,” Trump told the Post. “They’re making a mistake because I have a gut and my gut tells me more sometimes than anybody else’s brain can ever tell me.” Powell is set to speak at 5PM GMT.