What can cause a correction in the US market
As a result of trades on June 1, American stock exchanges did not show clearly pronounced dynamics. The S&P 500 fell 0.05% to 4202 points, the Nasdaq corrected 0.09%, and the Dow Jones increased 0.13%.
The energy sector was the leader in growth, adding an impressive 3.93%. In addition, the real estate sector (+ 1.69%), as well as raw materials (+1.39), showed solid dynamics. On the other hand, the companies in the healthcare sector looked worse than the market (-1.64%).
Abbott Laboratories (ABT: -9.3%) downgraded its forecast for the full year 2021 due to reduced demand for covid tests in the United States and other developed countries.
The US Supreme Court rejected Johnson & Johnson’s (JNJ: -2.2%) appeal over the use of talcum powder in the company’s products. As a result, consumer compensation will amount to $ 2.1 billion.
Investment companies KKR & Co (KKR: + 0.7%) and Clayton Dubilier & Rice LLP will buy back 100% of Cloudera (CLDR: +23.9) shares for $ 5.3 billion ($ 16 per share).
Today, negative dynamics prevail on world stock markets. The indices are close to historical highs, so they slide into the red zone in the absence of drivers for growth. The strengthening correction in the middle of the month may be the discussion Fed of curtailing the QE program against the background of high inflation and the rapid pace of recovery of the American economy. Uncertainty about the infrastructure plan passed by Congress also does not add optimism to investors.
At the auction on Tuesday, oil prices added 4% at the moment, updating the highs of the current year.
As part of the OPEC ministerial meeting, maintaining the increased production levels agreed on April 1. In addition, Saudi Arabia will also slightly increase production after a voluntary cut.
Thus, in June, show, in general, will increase by 0.7 million barrels per day, in July – by another 0.85 million. As a result, the market expects a significant increase in fuel consumption in the summer months. As a result, the oil deficit will persist.
Asian stock exchanges showed mixed dynamics at trading on Tuesday. Hong Kong’s Hang Seng dropped 0.81%, China’s CSI 300 fell 0.97%, and Japan’s Nikkei 225 rose 0.46%. EuroStoxx 50 loses 0.14%.
The 10-year Treasury yield is 1.61%. Brent futures price reaches $ 70 per barrel.
We expect that the upcoming session of the S&P 500 will be in the range of 4180-4230 points.
The Freedom Finance Sentiment Index remains at 61 out of 100, still, however, reflecting market participants’ hope for a recovery in the global economy this year. Inflation also remains in the focus of investors’ attention.
Technically, the S&P 500 is still in a long-term uptrend. However, the day before tested the level of the historical maximum of 4238 points. A sharp bounce off this mark creates the potential for a double top pattern to form, which could lead to a short-term correction. The critical support is the level of 4180 points.
