US stock market in the correction phase


The US market is experiencing a correction.

Major US indices strengthened on Friday, but the market continued to correct. On Friday, the Dow Jones Industrial Average lost 0.6%, the NASDAQ Composite added 0.6% and the S&P 500 rose 0.1%.

Asian markets also showed growth on Monday morning: Japanese indices gained 0.7%, Chinese indices gained 0.9%.

Energy market. Oil prices rose on Friday. Brent crude rose $ 2 to $ 86.40 a barrel. Oil is now trading almost at its 2021 highs, which coincide with the 2018 highs.

Statistics on the Chinese economy have proved optimistic. China’s GDP grew by 4.0% in the fourth quarter compared with the previous year, which is better than the 3.8% growth forecast. In December, industrial production increased by 4.3% year on year. The unemployment rate in China was 5.1%.

S&P 500: 4,662. Trading range: 4,640 – 4,670.

Friday’s report showed that U.S. retail sales fell 1.9% in December. Excluding cars, retail sales fell by 2.3%. The rise in prices in recent months has apparently had a negative impact on purchasing activity. In addition, the University of Michigan said its preliminary consumer sentiment index fell from 70.6 to 68.8.

The macroeconomic calendar for this week is devoid of any important news from the United States. Data on new housing in December and sales of existing homes will be published on Wednesday and Thursday.

The epidemiological situation in the world remains challenging, although the number of new cases of coronavirus dropped yesterday. Global cases were 1.94 million, just under 2 million. The US reported 288,000 new infections, France – 278,000 and India – 258,000. It is noteworthy that the global spread of the omicron variant has slowed sharply. Mortality did not exceed pre-omicron levels. In Britain, where omicron appeared earlier than in other developed countries, the number of cases fell three times from a high published on January 4 to 70,000. Mortality is low, at about 0.1% of all registered cases. In Russia, omicron is just beginning to spread. Yesterday, the country reported 29,000 new cases, with strong increases in Moscow and St. Petersburg.

The US market is experiencing a correction. The S&P 500 closed below its 50-day moving average on Friday. New waves of corrective sales are possible.

The largest US bank JPMorgan reported a 14% drop in profit in the fourth quarter to 10 billion USD. However, the indicator turned out to be significantly above the analysts’ forecast. Revenues remained almost unchanged at $ 30 billion. Analysts believe that banks will be one of the few sectors that will benefit from the Fed’s interest rate increase.

USDX: 95.20. Business range: 94.90 – 95.50. The US dollar index showed the first strong rebound since the decline began on January 11. The dollar is currently trading downwards. This can be attributed to the mild rhetoric of Federal Reserve Chairman Jerome Powell over raising rates at an inflation rate of 7%, the highest level in 40 years.

USD / CAD: 1.2540. Business range: 1.2500 – 1.2580. The pair is trading under the pressure of higher oil prices. It is therefore likely that quotations will continue to lose ground.

Conclusion: The market situation is largely stable. The US stock market is experiencing a correction. New losses are possible. Omicron is spreading more slowly in the US and Europe, with low mortality.

Article author: Instaforex team

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