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Wall Street pares early losses to end day slightly higher
Consumer staples and utilities lift indexes higher on Monday.
Bank stocks gain traction on expectations of softer regulations on the sector.
Investors are awaiting developments around the tax reform.
After starting the week on a negative note amid heavy losses witnessed on Asian and European indices, major equity indexes in the U.S. finished the day slightly higher following a choppy session.
General Electric suffered heavy losses after it announced a dividend cut and reduced its profit forecast. Moreover, the company said that it would focus more on health care, aviation, and energy within the frame of its new restructuring plan. “It’s a big deal in terms of GE’s world. That could be very well why utilities are getting a bid today as you see the search for yield continue,” Ryan Larson, head of U.S. equity trading at RBC Global Asset Management in Chicago told Reuters.
In fact, the S&P 500 Utilities Sector (SPLRCU) added more than 1% on the day while the S&P 500 Consumer Staples Sector (SPLRCS) rose 0.6%.
In the meantime, on the back of a Wall Street Journal report that claimed a bipartisan group of Senate lawmakers reached a tentative deal to ease post-crisis banking rules, the S&P 500 Financials Sector (SPSY) gained 0.2%. Regardless of today's market action though, investors remain reluctant to take large positions as the primary focus stays on developments surrounding the tax plan.
The Dow Jones Industrial Average added 19.07 points, or 0.08%, to 23,441.28, the S&P 500 rose 2.44 points, or 0.09%, to 2,584.74 and the Nasdaq Composite gained 6.40 points, or 0.09%, to 6,757.34.
DJIA technical outlook
Valeria Bednarik, Chief Analyst at FXStreet writes, "DJIA's daily chart shows that the index settled a couple of points above a still bullish 20 SMA, the second day in-a-row that the index battles to hold above the indicator. In the same chart, the Momentum indicator heads lower around its mid-line, whilst the RSI indicator extended its decline from overbought readings, now heading south around 61, its lowest in a month, all of which favors additional declines ahead, particularly on a break below Friday's low of 23,307. Shorter term, and according to the 4 hours chart, a bearish 20 SMA capped intraday advances, now the immediate resistance around at 23,457 as the index struggles to recover above the 100 SMA. The Momentum indicator heads higher around its 100 level, while the RSI turned south, now at 46, leaving a neutral-to-bearish stance."
Headlines from the NA session
Forex today: cautious play, dollar steady at key support, carry soft on prospects of higher global rates
US CPI Preview: Inflation looked anemic outside of hurricane effects - Wells Fargo
Details on US tax reform are being ironed out - ANZ
EIA: US shale output seen increasing by 80,000 bpd in December - Reuters
Market wrap: a subdued session, dollar sideways - Westpac
All eyes on the Fed, too ambitious? - Scotiabank
NY Fed: Expectations about consumers’ financial situations remain elevated
Philly Fed: Forecasters see stronger outlook for growth over the next two quarters