S&P 500; US Indexes Fundamental Forecast – March 17, 2017

The major U.S. equity indices posted two-sided price action on Thursday with an early bias to the upside, but by the end of the session all had closed lower, producing potentially bearish chart patterns. The selling pressure wasn’t strong enough to signal an impending change in trend, but it did suggest the selling was greater than the buying at current price levels.

With the Fed’s interest rate decision out of the way, investors are now shifting their focus back to the Trump Administration economic policies. While the Fed’s less-hawkish monetary policy statement may have encouraged financial market traders to trim positions, the Republican handling of the nation’s healthcare package pressured healthcare stocks. Adjustments to Treasury yield spreads may have had an influence on utility stocks, which posted a slight decline.

Utilities closed nearly 1.1 percent lower and was the worst performer in the S&P 500 Index. Healthcare stocks lost 0.9 percent, pressuring the NASDAQ Composite.

The stock market showed a bullish reaction to the Fed’s announcement on Wednesday, but a negative reaction to Trump’s proposal to cut the National Institutes of Health’s (NIH) spending by $5.8 billion.

Helping to underpin the markets was a rise in crude oil prices. U.S. WTI crude snapped a seven-day losing streak on Wednesday after weekly inventory data showed an unexpected drawdown.

In the U.S. on Thursday, Building Permits came in at 1.21 million units, below the estimate and previous read. Housing starts, however, beat the estimate with 1.29 million units versus 1.26 million units.

The Philly Fed Manufacturing Index continued to show signs of strength, coming in at 32.8. Weekly unemployment claims were 241K, pretty much in line with expectations. The JOLTS Job Openings report showed a 5.63 million increase versus a 5.45 million estimate.

On Friday, investors will get the opportunity to react to a slew of economic data. The major report is the Preliminary University of Michigan Consumer Sentiment. It is expected to come in at 97.1, up slightly from the previous read. Capacity Utilization is expected to come in at 75.5% and industrial production at 0.3%.

Minor reports include the Conference Board’s Leading Index, Preliminary University of Michigan Inflation Expectations and the Labor Market Conditions Index.