US stocks higher at the start of Fed week

Summary:

• US stock markets start  higher

• Boeing shares slide 

• Wednesday’s Fed meeting in focus

There’s been small gains seen overall for US stocks to kick off the new week, with the indices across the Atlantic trading slightly higher following the opening bell. The S&P500 (U500 on xStation) is back above the 2830 handle and trading within 4% of its all-time high. One interesting point to make for US equities is that the strong rally at the start of the year has caught many off guard and there’s a sense that FOMO (Fear Of Missing Out) could become a factor here if investors chase it higher.

The US500 is trading in a positive manner after breaking above 2824 last week with price now at its highest level in over 5 months. 2865 the next swing level to look to above. 2824 could be seen as possible support. Source: xStation

According to Deutsche Bank, From October till the start of the month, investors pulled $100 billion from US equity funds, clearly showing caution due to last year’s rout. However, the start of last week saw $31 billion flow back in, in one of the largest ever rushes to purchase US stocks. This was only the 10th time that a rush of this size has been seen but it is worth noting that of the 9 prior bursts of comparable fund inflows, the S&P500 was down the following month 6 times with an average loss of 5%. Finally the bank notes, that the other occasions when the market reacted positively following these flows were in 2013 and 2016, when the flows themselves had badly lagged a strong stock rally - something which could be seen to have happened here.   

Shares in Boeing remain under pressure with price threatening to break below the 50% fib of the rally seen from last December’s low. Source: xStation

Boeing shares were making headlines for the wrong reasons last week, with sizable declines due to planes being grounded. The stock has begun this afternoon also lower, dropping more than 2% after the Wall Street Journal reported the Department of Transportation and federal prosecutors are scrutinising the development behind the planes involved - 737 Max models.

There’s little by the way of any scheduled news for the US session, with markets awaiting Wednesday’s Fed meeting which is the biggest event of the week for US stocks.