Stock Indexes at Record Highs

STOCK INDEX FUTURES

S&P 500 and NASDAQ futures hit record highs in the overnight trade. However, there was some pressure on futures on news that housing starts declined 12.3% in June from the previous month to 1.173 million. This was the largest monthly percentage drop since November 2016 after the stronger 4.8% starts growth that was recorded in May. Economists had expected a 2.2% decline for starts.

Residential building permits also declined, falling 2.2% from May to an annual rate of 1.273 million last month. Economists predicted a 2.2% gain for permits in June.

At 9:00 central time Federal Reserve Chairman Jerome Powell will deliver his semiannual monetary policy testimony before the House Financial Services Committee in Washington. The Fed Chair is expected to deliver an upbeat assessment of the economy and stick to previous opinions on rate hikes.

Second quarter S&P 500 earnings growth is now estimated to be 21.2%, which is up from 20.7% on July 1, according to Thomson Reuters I/B/E/S.

U.S. stock index futures are holding up well in spite of the ongoing global trade uncertainties, as the still relatively low global interest rate environment and the mostly stronger than estimated U.S. corporate earnings reports remain supportive.

CURRENCY FUTURES

The U.S. dollar advanced yesterday after bullish comments from Federal Reserve Chairman Jerome Powell about the strength of the U.S. economy. In his congressional testimony on Tuesday, Powell said he believed the U.S. was on course for additional years of consistent growth, while playing down the risks to the U.S. economy of a potentially escalating global trade conflict.

The U.S. dollar is higher today and the euro currency is lower on news that euro area core inflation was revised lower.

The British pound fell to a 10 month low as inflation in the U.K. came in weaker than expected. Consumer prices increased 2.4% in June from a year ago, which compares to the estimate of a gain of 2.6%.

The Canadian dollar and the Australian dollar are lower due to weaker crude oil prices.

INTEREST RATE MARKET FUTURES

After falling below an uptrend line on Monday, the thirty year Treasury bond futures are a little higher today, but still below uptrend lines.

Other than Fed Chair Powell there are no other Federal Reserve speakers scheduled for today.

At 1:00 the Federal Open Market Committee will release its Beige Book on the economy. This book is produced approximately two weeks before the monetary policy meetings of the Federal Open Market Committee. The next FOMC meeting is scheduled for August 1. No change in policy is anticipated at the August meeting.

The probability of a fed funds rate hike at the Federal Open Market Committees September 26 meeting is 89%, which is unchanged from yesterday.

Although flight to quality buying is likely to come into the market from time to time, the longer term trend for futures is lower.

SUPPORT AND RESISTANCE

September 18 S&P 500

Support 2803.00 Resistance 2820.00

September 18 U.S. Dollar Index

Support 94.66 Resistance 95.210

September 18 Euro Currency

Support 1.16430 Resistance 1.17260

September 18 Japanese Yen

Support .88640 Resistance .89160

September 18 Canadian Dollar

Support .75360 Resistance .75970

September 18 Australian Dollar

Support .7332 Resistance .7405

September 18 Thirty Year Treasury Bonds

Support 144^20 Resistance 145^12

August 18 Gold

Support 1218.0 Resistance 1232.0

September 18 Copper

Support 2.7100 Resistance 2.7600

September 18 Crude Oil

Support 66.31 Resistance 67.23

Contact Alan for more extensive information on these markets at 312.242.7911 or via email at alan.bush@admis.com. Thank you.

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