Stocks Move Higher As Inflation Fears Subside

S&P 500 futures are moving higher in premarket trading as the bullish trend stays strong despite yesterday’s minor pullback.

On Tuesday, traders had a chance to take a look at additional housing market data. Case-Shiller Home Price Index increased by 2.2% month-over-month in March compared to analyst consensus which called for growth of 0.9%. On a year-over-year basis, Case-Shiller Home Price Index increased by 13.3%.

New Home Sales declined by 5.9% month-over-month in April after growing by 7.4% (revised from 20.7%) in March. At this point, it is too early to tell whether the rapid growth of house prices has finally put material pressure on demand.

Meanwhile, inflation fears continue to subside, and the yield of 10-year Treasuries has declined to 1.56%. If Treasury yields move towards the 1.50% level, tech stocks will get more support and push S&P 500 to new highs.

Gold Breaks Above The $1900 Level
Falling yields have finally managed to provide sufficient support to precious metals, and gold moved above the psychologically important $1900 level. Silver is also moving higher, trying to get to the test of the resistance at $28.30.

Gold mining stocks have been trading in a tight range in recent trading sessions so they’ll have a good chance to gain more upside momentum and move out of this range today.

I’d note that gold managed to get from the $1675 level in late March to the $1900 level without any material pullback, and RSI moved to the overbought territory. The risks of a pullback are increasing, but weak dollar and falling yields may push gold to new highs in the upcoming trading sessions.

WTI Oil Pulls Back Below $66
The recent API Crude Oil Stock Change report indicated that crude inventories decreased by 0.44 million barrels compared to analyst consensus which called for a decrease of 1.28 million barrels.

Today, oil traders will focus on EIA data which usually has more impact on the market. The oil market has recently managed to shrug off fears about a successful Iran nuclear deal and focused on rising demand, so a better-than-expected EIA report may push oil to new highs.

Subscribe to our newsletter

Don't miss new updates on your email