Summary:
US stocks surged over 1% on Tuesday after a fragile Israel-Iran truce, with Fed Chair Powell's testimony on the central bank's future in focus.
US stocks rallied more than 1% on Tuesday on a fragile truce with Israel and Iran. Fed Chair Powell's congressional testimony regarding the central bank's path forward is also closely watched.
But earlier airstrikes did not destroy Iran's nuclear capability and only set it back by a few months, according to a preliminary US intelligence assessment, which means the issue could be far from being solved.
Hedge fund leverage hit a five-year high last week, with speculators buying financial stocks, Goldman Sachs data showed, as the sector benefits from higher for longer interest rates.
Meanwhile, they upped short positions on Europe and Asia, while remaining modestly long on North American stock. That came despite US stocks underperforming in the first half of this year.
Executives at big US banks warned in April of economic turbulence from tariffs that could weigh on economic growth, even as their profits beat forecasts in Q1. Therefore, trade deals are the game changer.
The Conference Board said Tuesday that its consumer confidence index slid to the lowest level since the COVID-19 pandemic in June. The outcome surprised economists who had expected a small uptick this month.
The Dow has pushed above 200 SMA, but bearish MACD divergence may undercut the rally. If the double top pattern materialises, the index will likely retest the low around 42,300.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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