With investors turning cautious over a week that would see lots of earnings as well as federal bank meetings, the US stocks have recorded a lower close on Monday. The S&P 500 SPX, with a +0.30% drop closed down 6.55 points even as Stocks pared premature losses. All sectors lowered down except Consumer Discretionary, which recorded a tiny gain. The drop in oil prices hit hard at companies yet again, thanks to the sector selling off 2%.
Completing the 118-point deficit that The Dow Jones Industrial Average was experiencing, it finished down at 77.79 points, or 0.4% at 18,493.06. Other companies who led the losses included Chevron Corp -2.45%, Exxon Mobil Corp -0.41% and UnitedHealth Group Inc -1.36%. THE Nasdaq Composite Index -0.05% dropped down 2.53 points.
The rise to an all-time high last week by the SP 500 as well as the Dow seems to suggest that investors are unperturbed about the Brexit, according to Maris Ogg, who is the president of Tower Bridge Advisors, in reference to the UK’s decision to leave the European Union on 23rd June, 2016. However, Ogg does not seem too hopeful and has asked people not to think much about it as the Federal Bank is likely to keep the rates on hold, at least until after the elections.
Central Banks meet to make decision
The Federal Bank will be holding its meeting on monetary policy on Tuesday and is poised to announce its decision the next day. It is expected widely that the central bank will hold steady interest rates and stop short of causing a rise in the rate in September, thanks to the uncertainty about the general Economic Outlook.
Meanwhile, the Bank of Japan's decision on rates is due on Friday. Bank of Japan's decision will be closely scrutinized to determine if there are any chances of easing the value of the Yen after the Brexit which was accompanied by a slowdown in the economy. A total of 15 central banks are all set to meet this weekend.
According to Frank Cappelleri, who is a technical analyst with Instinet LLC, although the SPX has broken out, it would not be wise to expect the seemingly smooth advance to continue without any issues. He also stated that though the trend is quite impressive, it is inevitable that at some point of time, the momentum will reduce. At this point, the market will have to hold up, inspite of functioning under difficult circumstances.