Summary:
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US benchmarks little changed on the open
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21 trading sessions without a 1% move for S&P500
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Facebook called lower as fine settled at $5B
After a strong push higher in US indices which began around the time of the European close on Tuesday, the rally petered out with the S&P500 failing to move back above the 3009 level. It remains a range bound trade for US stocks close to recent highs of late, with the markets seemingly slipping into a little bit of a summer lull after a strong run higher.
Volumes are typically lower around this time of year and this has caused a bit of chop intraday without the bigger picture changing too much. It is now in fact 21 trading sessions since the S&P500 made a move of 1% or more during the US session. This is a little misleading as volatility hasn’t entirely dropped off, but it is symbolic of a market that has been ranging for the past few weeks.
The bigger picture for the S&P500 remains one of consolidation around the all-time highs of 3023 with nearer term resistance possible around 3009. Potentially key support resides at 2974. Source; xStation
The bigger picture for US equities appears to be unclear at present and Traders are waiting for two major central bank announcements in the next week that will likely determine the moves going forward. First off the ECB announce their latest policy tomorrow lunchtime and a full preview of the event can be read here. The German Dax soared yesterday in part on hopes that the ECB will deliver not only a rate cut of 10 bps to the deposit rate but also a dovish message and possible resumption of the Asset Purchase Programme (APP). US indices are generally more sensitive to Fed policy decisions but if there’s another big move in the Dax tomorrow then the impact will no doubt be felt stateside.
One stock that could be worth keeping an eye on this afternoon is Facebook after the social media giant settled with the Federal Trade Commission on a $5B fine for the company’s privacy policies. This fine is the largest ever imposed on a tech company and substantially above the prior record of $22.5M against Google back in 2012. The charge relates to the Cambridge Analytica scandal and the fine accounts for just under 10% of the firm’s revenues last year. The stock is called to begin around 2% this afternoon.
Shares in Facebook are expected to begin lower after news of the record fine. The market has retraced the bulk of the decline seen in the second half of 2081 but remains shy of the record high at 218. The 78.6% fib may now offer some support around the 197 level. Source: xStation
