2016-07-29 12:49:12

The rise in the American stock indices has suspended after reaching new record highs earlier in July.

Pressure on U.S. stock indexes are caused by the following factors:

  • decline in oil prices (in July the price of oil fell by 15%);
  • reduced but still continuing concerns about the state of the global economy after Brexit (the Bank of England has warned that Brexit would have a negative impact on the British economy in the coming months);
  • today's decision by the Bank of Japan (the Bank left the volume of government bonds purchase at the previous level of 80 trillion yen and kept the rates on deposits of the commercial banks at the level of -0.1%), which disappointed investors;
  • comments made by the US Fed that short-term risks for economic growth have decreased, which opens up possibility of the interest rates increase in the USA in the next coming months.

At the end of trades on Thursday, the DJIA (Dow Jones) fell by 0.1%, to 18457.00 points, S&P500 rose by 0.2% and the Nasdaq Composite grew by 0.3%. The DJIA has been declining for a fifth consecutive session.

However, the decrease in the indices is just the correction after the rapid growth in July. The decline can be also associated with the profit-taking in the long positions at the end of the month (today is the last trading day of the month).

Positive US macro-economic data and the Fed’s reserved position on the interest rates increase have caused recent rise in the American stock indices.

Low interest rates and investor confidence that the U.S. economy, which remains stable amid the global instability, help to maintain high levels of the US stock indices, which have reached new record highs.

DJIA: The rise in the American stock indices has suspended.  Fundamental analysis for 29.07.2016