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18.05.2020, 07:31

American Stocks May Resume Climbing this Week as Economic Activity Grows

Dow Jones futures turned higher vs. fair value Sunday along with S&P 500 futures and Nasdaq futures. The coronavirus stock market rally eased last week, but rebounded from key support levels and finishing strong. The action allowed Apple (AAPL), Facebook (FB) and Google parent Alphabet (GOOGL) to carve new buy points while Advanced Micro Devices (AMD) and Tesla (TSLA) showed constructive action in their handles.

Dow Jones Industrial Average futures last week climbed 214 points from the bottom to 23,685.42, or 0.25% last Friday alone, implying an opening gain of 0.5%. S&P 500 futures climbed 1.35% on Monday morning. Nasdaq 100 futures advanced 1.25% at the beginning of the week.

Wall Street's main indexes were set to open higher on Monday amid optimism that easing coronavirus restrictions would boost activity this month. Federal Reserve Chairman Jerome Powell said that assuming there is not a second wave of the coronavirus the US economy will recover steadily thought the second half of 2020.

Apple stock, Facebook stock, Google stock all have handles on weekly charts, though the shakeouts were relatively modest. AMD stock rose modestly, working its way toward a cup-with-handle buy point. Tesla stock edged lower, showing some tighter action in a wild base despite some notable news during the week.

The Justice Department is moving toward a possible antitrust suit vs. Google in next couple of months. Several states also are working on separate litigation, also focused on Google's ad search dominance. On Saturday, President Donald Trump tweeted that the "radical left" control Google, Facebook and Twitter (TWTR), adding that the administration is "working to remedy this illegal situation." Google stock fell modestly late Friday on the Department of Justice (DOJ) report. Facebook stock and Apple stock also edged lower.

The DOJ antitrust reports could pressure Google stock at the start of the week. Stepped-up antitrust enforcement also could affect tech giants Facebook, Apple and Amazon.com (AMZN) as well as Twitter. Google has a market cap of $937 billion. Combined, the five companies are worth about $3.5 trillion, a big chunk of the Nasdaq and broader stock market.

China's Commerce Ministry threatened to use "all necessary measures" in response to new US curbs in chip sales and other technology to Chinese telecom gear giant Huawei. Many chip stocks sold off Friday on the expanded US restrictions.

Federal Reserve Chairman Jerome Powell said that the US economy will recover from the coronavirus pandemic, but the process could stretch through until the end of next year and depend on the delivery of a vaccine. He also said that while the recovery may take a while the Fed has more ammunition if needed.

The Dow Jones Industrial Average is expected to trade at 23221.19 points by the end of this quarter, the 12-month analysts price forecasts for Dow Inc have a median target of 37.50, with a high estimate of 45.00 and a low estimate of 31.00. The median estimate represents a +11.74% increase from the last price of 33.56. 


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