Wall St looks to breakout higher aided by ADP beat

Summary:

  • US indices firmly higher ahead of opening bell

  • ADP beat (+195k vs +148k exp). ISM due at 3PM (BST)

  • S&P500 up through prior resistance zone


Once again US indices are trading firmly in the green ahead of the US session with more positive noises coming out of both the US and China on the trade front and boosting equities around the globe. The markets continue to look through the negatives and focus on the positive and even if this seems irrational it is clear now that the bulls have regained control of the tape and will be looking to press home their advantage. 

 

On the data front we got an insight into tomorrow’s eagerly awaited NFP report (read our full NFP preview here) with the private ADP number topping estimate. The employment change came in at +195k vs +148k exp, although some of the gloss was taken off this with the prior being revised down by 12k to +142k. It is also worth noting the break down of jobs with service providing to roles accounting for the vast majority (+184k vs +146k prior) and goods producing (+11k vs +9k prior).    

The steady improvement in the ADP numbers seen in recent months continued in August with service providing roles providing the bulk of the jobs. Source: XTB Macrobond

 

This afternoon also sees the release of the services or non-manufacturing ISM PMI for August and given the market reaction the manufacturing equivalent falling into contraction territory on Tuesday, this could certain have an impact on stocks. The data is due out at 3PM with an expected 54.0 after 53.7 last time out. The service sector in general has been outperforming the manufacturing sector for much of the year and in terms of the broad economy it is worth keeping a close eye on whether weakness in the latter starts to creep into the former.

 

US stocks have moved up to their highest level in over a month after finally breaking above the 2946 level that had provided a ceiling. This level could now be seen as support and with the 8/21 EMAs printing a bullish cross it seem that the recent consolidation may have come to an end. Daily highs around 2972 coincide with a swing level from earlier in the summer but a move through there would open up the possibility of further gains to the 3000 level and possibly even a retest of all-time highs of 3029. Source: xStation

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