US stocks continue to push higher into the year-end and institutional investors have been buyers as the Trump Presidency looms.
SP 500 – Daily Chart
The price of SP 500 continues to defy gravity and there is potential for a correction sell-off. The year-end can often see profit-taking as institutions look to rebalance their portfolios for the new year. That could lead to some selling in late December. The first support level for the index would be 5,900.
Stocks drove the S&P 500 to a new all-time high and the Nasdaq 100 also posted a 2-1/2 week high. Better-than-expected ISM manufacturing data and October construction spending boosted the outlook for a soft landing.
Super Micro Computer jumped 21% after a special committee found no evidence of misconduct by management or the board. Tesla gained 3% after Roth Capital Partners upgraded the stock to buy, but fellow automaker Stellantis NV was down more than -6% after Bloomberg said CEO Tavares is unexpectedly stepping down.
Markets will now await the ISM services number on Wednesday to see how the broader economy is faring. The key number of the week for stocks will be non-farm payrolls on Friday. The markets are now discounting chances at 65% for a -25 bp rate cut at the December 17-18 FOMC meeting.
Institutions have increased their appetite for US stocks after the Trump election win as they expect corporate deregulation and other factors. Despite the recent surge there is still correction potential into year-end.
