The US stock market is demonstrating resilience against economic worries such as the Greek Crisis, falling oil prices, weakness in emerging markets and the recent Chinese market sell-off.
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Some argue that the bull market has already run for too long, and that concerns outside the US are putting enough pressure to make the stock market tumble. However, the opposite might be true.
The Tenacity of the US Stock Market
The unwillingness of domestic stocks to fall is a sign of strength and we could see stocks rise even further, especially if things start to calm down globally.
Dow Jones Industrial Average Index, one year out. Graph: MetalMiner.
Major market indexes like the Dow Jones Industrial Average, S&P 500 and the New York Stock Exchange remain range-bound since February. We recently pointed out that this trendless period was causing investors to hesitate. It was hard to tell whether the market is going to roll over or continue on its way up. Some new clues are pointing to the latter.
NASDAQ Composite Index, one year out. Graph: MetalMiner.
The fact, that US stocks held their values well while Chinese markets plunged proves that Chinese financial news can only weigh on US stocks in the short term. In the longer term, China does not lead the US and its recent troubles do not appear to affect markets here that much.
What This Means for Metal Buyers
Moreover, the NASDAQ (a technology-focused index) recently hit an all-time high. The fact that technology stocks are leading the market is a positive sign. Lower oil and commodity prices are hurting the shares of energy and commodity producers, which helps explain why the other indexes are still range-bound. But, good earnings reports from leading tech companies are increasing the appetite of funds to buy stocks.
In conclusion, the US market is not immune to what happens outside the US. Further bearish news from outside could weigh on US shares, but, so far, things are looking good for US stocks in the second half of the year.
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