August kicked off with a very mixed day for trading. The Dow reached 22,000 early in the day then backed away from that big round number. The new high was not confirmed by other US indices although the Dax did try to bounce back from a recent selloff. The one other major index also reaching new heights this week has been the Hang Seng, which could attract significant attention from traders again today.
US economic data came in weak Tuesday. Construction spending posted a surprise decline and sales results from automakers were dismal, particularly General Motors where sales fell 15% from a year ago, way more than the 7% decline the street had expected, and the company announcing it plans to cut production rather than offer incentives to move inventory. Signs of inflation also appeared with Core PCE inflation and the prices paid component of the ISM report ramping up. Wednesday morning brings ADP payrolls as the run up to Friday’s big nonfarm payrolls report continues.
After the close, US indices picked up a bit after Apple and Allstate beat the street on earnings and Apple released better than expected guidance. Round number resistance remains in place near 22,000 for the Dow and 6,000 for the NASDAQ 100 which could be challenged overnight and into Wednesday.
Crude oil turned downward during the day, dragging on resource currencies like AUD, NZD and CAD. WTI took another hit late in the day after API followed up last week’ s huge drawdown with a surprise 1.8 mmbbl increase. With traders expecting a 3.1 mmbbl drawdown in tomorrow’s DOE report, oil may remain active over the next 24 hours and could also have an impact on trading in energy shares.
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