June 16th 2014 – Stocks Hold on M&A News, Despite Iraq Worries
Market View:
With the troubles flaring up in Iraq and the Russians cutting of the gas supply to the Ukraine, geo-political events are having an impact on the market again.
Just how much is yet to be determined. My estimation for the S&P 500 for was a dip to around 1910/1920, but it hasn’t got there yet and in fact has held these last 2 trading days. Perhaps the Fed meeting this week and the statement that will be made on Wednesday will decide whether we go higher or whether we need to come down a little more before we have the beginning of the next up leg.
Market News:
U.S. stocks on Monday managed to end mildly up for a second session as unease over escalating unrest in Iraq curbed enthusiasm over upbeat economic reports and activity on the corporate deal-making front.
Monday’s economic data had the New York Federal Reserve’s Empire State index of business conditions in June rising to its best reading since June 2010; industrial production for May up 0.6 percent and a gauge of builder sentiment jumping in June.
The Iraqi government is trying to fend off Sunni Islamist insurgents who took control of the north of the nation during the past week, with U.S. Secretary of State John Kerry saying in an interview with Yahoo! News that the White House is willing to talk to Iran over the deteriorating security conditions in Iraq.
Investors also monitored geopolitical unease in Ukraine after Russian natural gas exporter Gazprom reduced supplies to Ukraine after the Ukrainian government did not meet a deadline to pay its gas debts in discord that could hinder gas exports to Europe.
The Federal Open Market Committee meets Tuesday and Wednesday, with the FOMC expected to reduce its growth forecast for 2014 in light of the negative 1 percent first-quarter GDP.
The International Monetary Fund cut its growth outlook for the U.S. economy and said the Federal Reserve could hold interest rates at zero for longer than investors anticipated.
Tuesday
FOMC meeting begins
8:30 a.m.: CPI
8:30 a.m.: Housing starts
8:30 a.m.: Building permits
News Sources: CNBC and CNN Money