Bulls dominate Wall Street on Friday, Lyft debuts on Nasdaq

Summary:
- Trade talks said to continue next week in Washington, US ready for months-long negotiations
- S&P 500 (US500 on xStation5) climbs back above the key resistance zone
- Lyft (LYFT.US) debuts on the Nasdaq stock exchange today

Stocks from the United States launched final trading session of the week higher and had a good reason for it. Miss in inflation data combined with beat in UoM data revision provided good landscape for stock market gains as lacklustre price growth puts aside any concerns over potential increase in borrowing costs. Moreover, some upbeat remarks from the US officials on state of trade talks with China were delivered over the night.

US500 (S&P 500 futures underlying) took a significant dive at the end of the previous week. The pair traded in the vicinity of the lower limit of the resistance zone ranging 2810-2825 pts for the major part of the week. However, price respected swing level from first half of 2018 (2790 pts handle). Failure to break below this hurdle provided bulls with fuel for more gains and the index broke above the aforementioned resistance zone today. Recent peak at 2865 pts can be seen as the near-term resistance to watch. Source: xStation5

Trade wars theme left the spotlight recently on the back of all the Brexit turmoil. Nevertheless, talks between the world's two largest economies continued this week and may continue in the foreseeable future. Larry Kudlow, White House top economic adviser, told reporters today that negotiations over the trade deal with China are by no means time-dependent and the United States are ready to continue talks for weeks if not months. This can mean that two countries either want to strike a really good deal or keep struggling with making progress. The latter may be the case as Steven Mnuchin and Robert Ligthizer said earlier this week that progress is being made. Talks are said to continue next week. Negotiators led by Chinese trade kingpin, Vice Premier Liu He, will arrive in Washington next week. What one may see as optimistic is the fact that Liu He is expected to meet with Donald Trump hinting that stakes may be high. Let us recall that unofficial reports that surfaced earlier this month said that any meeting between Donald Trump and Xi Jinping to sign the deal is unlikely to occur before late-April. Nevertheless, one should be wary that trade-related headlines may surface next week and they have a chance to move markets.

Celgene trades among S&P 500 outperformers after two adviser to merger with Bristol-Myers backed the deal. Source: Bloomberg

Company News

Celgene (CELG.US) is one of the best performing S&P 500 stocks today. Strong performance can be ascribed to its merger with Bristol-Myers Squibb (BMY.US). Namely, two advisers to the deal, Institutional Shareholder Services and Glass Lewis, expressed their backing for the tie-up and urged shareholders of both companies to vote in favor of the merger. Bristol-Myers shareholders are expected to vote on the deal during shareholder meeting on 12 April.

On the other hand, DowDuPont (DWDP.US) is trading as the worst Dow Jones member and one of the worst stocks in S&P 500 today. The company decided to cut earnings forecasts for the first quarter of 2019. The company reasoned this decision by saying that plastics business was weakening and unfavourable weather conditions disrupted operations of the agriculture unit. Given size of DowDuPont, such a profit warning may turn to be a drag for the whole US materials sector.

Lyft (LYFT.US), the US ride sharing company, is debuting today on the Nasdaq stock exchange. 32.5 million shares were offered in the Initial Public Offering at the price of $72. The pre-launch price discovery phase is still ongoing what is quite common thing for hot IPOs. The most recent Reuters report said that the stock is indicated to start trading at $86 per share hinting at massive demand. Regualr trading is expected to begin soon. We encourage you to take a look at our analysis of Lyft available here. 

DowDuPont (DWDP.US) broke below the upward sloping trendline at the end of September 2018 and began a steep decline. Bears surrendered in the vicinity of $50 handle one month later. We are observing range trading since and with today’s decline the stock found itself near the lower limit once again. Today’s price action suggest that we may see another bounce higher from there. In such scenario $56.60 handle may serve as the first hurdle for buyers. Source: xStation5

Daily summary: Global stocks finish week in upbeat mood
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Economic calendar: Wall Street to close early
Morning wrap (27.11.2020)
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