19, May 2017

Wall Street to extend gains as Trump fears eased

US stock indexes were set for a higher open, extending gains from the previous session as equities resurged after a massive drawdown in the light of a serious political scandal involving President Donald Trump and former FBI Director James Comey.

On Thursday, Wall Street top indexes closed in green territory, recovering some positions from their worst session of 2017 as investors haven’t totally lost their hope on the Republican leader.

The Dow Jones industrial average was up by nearly 55 points, with UnitedHealth as the top advancer and Cisco Systems plunging 7.2 percent to become the worst performer of the day.

The S&P 500 edged up by 0.4 percent, supported by telecommunication components. The Nasdaq composite followed the upward trend, closing 0.7 percent higher.

US markets came under significant pressure on Wednesday after media reports said Trump allegedly asked Comey to stop an investigation into then-National Security Advisor Michael Flynn regarding his relations with Russian officials. As GOP politicians recommended an independent investigation on Trump, fears that he won’t be able to successfully negotiate with Congress about deregulation and tax reform weighed on markets.

In economic news, Philadelphia Fed manufacturing index came in at a seasonally adjusted 38.8, beating a previous month 22.0 and expectations for a draw to 19.5.

Also, the Labor Department reported a decrease of 4,000 US citizens filing for unemployment benefits in the week ended May 12, leaving the total count at 232,000.

  • Dow Jones Industrial Average: +56.09 / +0.27% / 20663.02

  • Standard & Poor’s 500: +8.69 / +0.37% / 2365.72

  • Nasdaq Composite: +8.69 / +0.73% / 6055.13

It’s a light day for economic data, with the only report on the watch being Baker Hughes oil rig count at 17:00 GMT. Traders will also be looking at a speech from Federal Reserve Bank of St. Louis James Bullard as of 13:15 GMT.

Yesterday, Cleveland Federal Reserve Bank President Loretta Mester said that while rates are not expected to raise at every single meeting of the US regulator, labor market conditions and inflation continued to support gradual monetary accommodation.

"I think that it’s important for the FOMC to remain very vigilant against falling behind, especially given the low level of interest rates and the large size of our balance sheet," said Mester, adding that the Wall Street should be planning more than a single rate hike this year.

According to Fed funds tracked by CME Group’s FedWatch tool, traders are currently pricing in a 78.5 percent, rebounding as the Trump scandal eased.