We are witnessing positive momentum in U.S. stock indices, specifically the S&P 500, Nasdaq 100, and Dow Jones, as they continue to reach record levels. For example, the S&P 500 rose to 6,593 points yesterday, the Nasdaq 100 reached 24,017 points, and the Dow Jones hit 46,136 points, increasing approximately 12%, 14%, and 8%, respectively, since the beginning of the year.
Meanwhile, the Volatility Index (VIX) closed at 14.70 points, indicating investor comfort with U.S. equities.
Markets expect the positive momentum in U.S. stocks to continue in the coming period despite elevated valuations, driven by several key factors:
- Market expectations of a confirmed 25-basis-point interest rate cut by the Federal Reserve at its meeting on September 17, next week, along with forecasts for two additional rate cuts this year. This comes especially after disappointing labor market data that fell short of expectations, a decline in the Producer Price Index, and Consumer Price Index (headline and core) readings that aligned with expectations year-over-year, although both remain far from the Fed’s 2% target.
- Continued positive momentum in major technology stocks, with the “Magnificent Seven” (MAGS) index hitting a new record high on Wednesday, up approximately 14% since the start of the year. Additionally, the Philadelphia Semiconductor Index (SOX) reached record levels yesterday, rising about 20% year-to-date, indicating sustained demand for AI-related products and substantial investment inflows into the sector’s infrastructure.
- Notably, gold mining stocks have shown strong momentum, outperforming major technology stocks. For example, Barrick is up approximately 90%, Newmont 85%, and Agnico Eagle 97%.
From a technical perspective, indicators suggest the upward trend in the S&P 500 will continue for the following reasons:
- The 20-day, 50-day, and 200-day moving averages are aligned positively, with the 20-day average above the 50-day, which in turn is above the 200-day average, reflecting a bullish technical setup.
- The Relative Strength Index (RSI) currently stands at 68 points, reflecting strong bullish momentum.
- The Positive Directional Index (+DMI) is around 37 points, compared to 17 points for the Negative Directional Index (-DMI), indicating a significant gap between the two, which reflects strong buying pressure.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
