We could see a flat trading day as traders may be reluctant to add positions with the results of the bank stress test coming next week.
[B]What To Watch For In The US Session
• Bank Stress Test Results Next Week
• Auto Sales Expected To Have Plunged
• ISM Manufacturing On Tap
[/B][U][B]Improving Manufacturing and Looming Stress Test Results To Dictate Sentiment. [/B][/U]
We could see a flat trading day as traders may be reluctant to add positions with the results of the bank stress test coming next week. However, an improvement in the ISM manufacturing report which is forecasted to improve to 38.4 from 36.3 could add to recent bullish sentiment. We could see an improvement similar to the Chicago PMI which beat estimates by 5 points as it improved to 40.1 from 31.4. An increase in new orders and production for the region could be a sign that the recession is slowing. April’s auto sales are also due for release and are expected to decline to 9.7 million from 9.9 million which could weigh on the carmakers.
[B]Dow Jones 8168.12[/B]
The DJIA futures are pointing toward a positive open but as we saw yesterday that doesn’t always equal an up day for the blue chip index. Dismal auto sales and improving manufacturing activity could offset each other leaving the potential for banks shares to drag the index lower if traders decide to exit positions ahead of the stress test results.
[B]NASDAQ 1717.30[/B]
The Nasdaq is trading at its 20-Day SMA which could be enough for traders to look to take profits ahead of the bank stress test results. However, improving manufacturing activity could boost the outlook for the economy and tech stocks could continue to benefit from increasing optimism.
[B]S&P 500 872.81[/B]
The S&P 500 could also trade lower if weak auto sales and factory order which are expected to fall by 0.6% limit the positive sentiment generated by the improvement in the ISM manufacturing report.
