Could North Korea’s New Nuclear Test Drag S&P 500 Lower?



S&P 500 regained momentum last week

The S&P 500 Index (SPY) closed the week ended September 1, 2017, at 2,476.5, rising 1.3% compared to its close for the week ended August 25, 2017. Key positive news for the index was the rise in the ISM (Institute for Supply Management) manufacturing index to a six-year high of 58.8 for August from 56.3 in July. The uptick in monthly auto sales also added to a positive momentum. A fall in the jobs report seemed to be disregarded by the markets since no changes in the Fed’s policy are expected at least until the end of this year.

The best performing sectors of the S&P 500 index (IVW) in the week ended September 1, 2017, were the healthcare (XLV) sector and the information technology sector (XLK). The financials (XLF), utilities, and telecom sectors posted losses in the week.

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Speculators increased bullish bets for the first time in 3 weeks

For the week ended September 1, 2017, large speculators of the S&P 500 (IVV) index increased their net bullish positions to 35,991 compared to 24,951 contracts in the previous week. The data were reported by the CFTC (Commodity Futures Trading Commission) through its weekly Commitment of Traders report with data collected on Tuesday, August 29, 2017.

What might impact the S&P 500 index this week?

The market was closed on Monday, September 4, 2017, for the Labor Day holiday, but the remaining days are filled with economic data releases. Key reports scheduled this week include July factory orders, Markit services PMI (Purchasing Managers’ Index) indexes, ISM (Institute for Supply Management) non-manufacturing PMI, the Fed’s Beige Book, and the second quarter labor costs and productivity data. The focus could be on the renewed geopolitical tensions after North Korea’s nuclear test on Sunday, September 3. The markets in Asia traded lower on Monday morning, but we have to wait until Tuesday to see how the US markets will react.

In the next part of this series, we’ll analyze why the US dollar (USDU) rallied despite a weak August jobs report.


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