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Stock Indices: Dow Jones reaches fresh 3-month highs on dovish Fed rate outlook, Goldman Sachs, JP Morgan Chase support

On Friday Dow Jones Industrial Average traded within the range of 17,481.49-17,620.58. The benchmark closed at 17,602.30, rising 0.69% (120.81 points) on a daily basis. It has been the 20th gain in the past 34 trading days and also a sixth consecutive one. The daily high has been the highest level since December 30th 2015, when the Dow went up as high as 17,714.13. In weekly terms, the average added 2.26% to its value during the past week. It has been the 7th gain in the past 11 weeks and also a fifth consecutive one. The blue-chip gauge has extended its advance to 6.56% so far during the current month, following a 0.30% gain in February.

Among the companies included in the benchmark, 9 posted a daily decline on Friday and 21 posted a daily gain. Shares of Microsoft Corporation (MSFT) recorded the worst performance within the Dow on March 18th, going down 2.14% to close at $53.49. It has been the 8th drop in the past 21 trading days and also the steepest one since February 23rd. March 18th low of $53.45 per share has been the lowest price level since March 16th, when a low of $53.40 a share was registered. The slump came a day after the tech giant released a preview for the new Windows 10 platform. Microsoft shares have trimmed their advance to 5.13% so far in March, following two consecutive months of decline.

At the same time, the shares of Goldman Sachs Group Inc (GS) registered the most notable daily increase within the DJIA on March 18th, going up 3.07%, to close at $157.60, while marking their 11th gain in the past 20 trading days and also the steepest one since March 1st. March 18th high of $158.18 per share has been the highest price level since March 4th, when a high of $158.85 per share was reached. In addition, the daily volume (7.41M) has been the highest since February 16th. Goldman Sachs has added 5.40% to its value so far in March, following three successive months of decline. In February the stock lost 7.45%.

JP Morgan Chase & Co (JPM) was the second best performer within the Dow last Friday, appreciating 2.94%, to close at $60.48. It has been the 12th gain in the past 20 trading days and also the steepest one since March 1st. March 18th high of $60.97 per share has been the highest price level since January 8th, when a high of $61.27 per share was reached. In addition, the daily volume (29.57M) has been the highest since February 23rd. JP Morgan has added 7.42% to its value so far in March, following three consecutive months of decline. In February the shares tumbled 5.38%. On March 17th a $1.88-billion stock buyback program by the end of Q2 was authorized by JP Morgans board.

In weekly terms, 4 comprising shares registered a drop during the past week and 26 shares recorded an advance. Boeing was the best weekly performer, while Pfizer demonstrated the worst performance.

Equities were largely supported at the end of last week, after the Federal Reserve Bank kept the target range for the federal funds rate on hold between 0.25% and 0.50%, in line with market expectations. Fed policy makers noted that economic activity in the United States has been increasing moderately, but, however, they presented revised down GDP growth and inflation forecasts regarding 2016. US GDP is now expected to expand at 2.2% in 2016, down from a 2.4% growth rate, as projected in December 2015. The economy is expected to grow by 2.1% in 2017, a revision down from a 2.2% growth in the prior forecast, while in 2018 the GDP is to expand by 2%, or unchanged compared to the December forecast.

PCE inflation in the US is now projected to be at 1.2% in 2016, down from a rate of 1.6%, as forecast in December, while inflation estimates regarding 2017 and 2018 were kept intact at 1.9% and 2%, respectively.

Fed policy makers now expect two rate hikes during 2016, after in December 2015 projections pointed to four potential increases in the target range. Prospects of a rate hike delay tend to have a strong bullish effect on shares, as the latter become more appealing to investors compared to fixed-income assets.

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the Monday pivot levels for DJIA are presented as follows:

R1 – 17,615.05
R2 – 17,627.80
R3 (range resistance) – 17,640.55
R4 (range breakout) – 17,678.80

S1 – 17,589.55
S2 – 17,576.80
S3 (range support) – 17,564.05
S4 (range breakout) – 17,525.80

By using the traditional method of calculation, the weekly pivot levels for DJIA are presented as follows:

Central Pivot Point – 17,447.74
R1 – 17,775.14
R2 – 17,947.97
R3 – 18,275.37

S1 – 17,274.91
S2 – 16,947.51
S3 – 16,774.68

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