Stocks notch up gains ahead of Friday’s employment report
US stocks were unchanged to start the trading session, as investors focused on Syrian tension and the potential for a tapering of the quantitative easing program after the Federal Reserve meets in September. Stocks gained momentum throughout the session notching up nearly 1% gains across the major averages. Investors await Friday’s employment report which will likely drive capital flows for the balance of September. Yields continued to grind higher, pricing in a QE tapering at the FOMC meeting in two weeks.
The US trade deficit widened in July, but stronger imports will likely lead to increasing consumer demand. Imports to the U.S. rose 1.6% in July from June to $228.59 billion, while exports fell 0.6% to $189.45 billion, according to the Commerce Department. The US trade gap expanded by 13.3% to $39.15 billion, nearly matching the $39 billion gap forecast by economists.
July’s decline in exports partially reversed the strong gains of June, when exports hit their highest level on record reflecting increases in European and Asian economies. Rising exports were a key factor behind the acceleration of GDP growth to a 2.5% annual rate in the second quarter from 1.1% in the first.
The Nasdaq 100 was the best performing of the major averages climbing slightly more than 1%. The index is poised to test resistance near the recent highs which coincide with a horizontal trend line at 3,150. Support is seen near the 50-day moving average at 3056.
Momentum on the index is turning with the MACD (moving average convergence divergence) index poised to generate a buy signal. The trajectory of the MACD is upward sloping and poised to move from negative to positive territory. The RSI (relative strength index) is printing near 57, which is on the upper end of the neutral range.
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