Market Commentary & Analysis January 25, 2020

The stock market struggled to push back coronavirus news headlines and overvaluation utterance during this holiday abbreviated trading week. The broad S&P 500 index posted -1.0% loss. 

DJI Average print with -1.2% and heavy-technology Nasdaq Composite index with -0.8%, all three indices set a new historic high during the mid-week session; however, they were slapped with notable losses on Friday session. The small-cap Russell 2000 index continued to underperform, posting a 2.2% decline for the week. 

Gold Market

Click the Image to Enlarge

Technical Analysis and Outlook: The completed move to Inner Index Rally $3,337 on Jan. 22, is confirmed and validated with TSS TARC - Key Res $3,330 (propitiatory symbol not shown). 

The intermediate support is marked at Mean Sup $3,266 - a highly expected index move to the given mark, followed by the retest of the significant resistance. Also, the downside support levels are, Mean Sup $3,223, Mean Sup $3,170, Mean Sup $3,132, and Key Sup $3,075. 

Due to the new strain discovery of coronavirus in Wuhan, China, the country was forced to lock down various big, populous cities just before the festivities of the Lunar New Year. 

Also, there were two verified cases of the coronavirus in the United States, one in Chicago and the other in the Pacific Northwest - Seattle. However, the WHO (World Health Organization) didn't declare a worldwide coronavirus alert or public health emergency thus far.

There were big anxieties over that significant economic activity would stall a growth, as well as earnings growth potential, which rendered sellers a reason to sell the market, which many think is overvalued at this point. 

The market news

Global market growth concerns were substantiated with the -$4.34 or 7.4% weekly decline in West Texas Intermediate (WTI) crude price, the rise in United States Treasuries, and the substantial losses in the cyclical energy sector of -4.3%, material sector of -2.3%, and financial sector of -2.2%) postings.

On the other hand, the rate-sensitive utility sector posted a +2.4% gain along with the real estate sector posting +1.0% both finished easily higher amid the slump in yields. 

The leading information technology sector posted a +0.3% gain, mainly to earnings-driven increases in Intel and IBM. Shares of Intel climbed 8% on Friday trading session. 

On Friday the Bloomberg announced that Apple would launch production of low-cost iPhones in February and proposed to Taiwan Semiconductor Manufacturing Company, Limited (TSMC), to increase its chip supply to match strong iPhone demand. 

Broadcom Corporation entered two segregate multi-year agreements with Apple Inc. to supply the company it with high-performance wireless parts and modules.

Other notable news stories included Tesla Inc., which hit a $100 billion market-cap valuation, Comcast Corporation declaring that it anticipates video subscriber losses to rise this year, and Boeing once again delaying its 737 MAX timeline to June/July this year. 

The United States Treasury market endured some curve-flattening trading activity. The Two-year yield fell eight basis points to close at 1.48%, and the Ten-year yield declined 16 basis points to finish at the week at 1.68%. The United States Dollar Index (DXY) improved by 0.3% to 97.88. 

You might like these