The US stocks are recovering with the major indices all marginally higher now.
Goldman Sachs has lowered its estimate of the likelihood of a U.S. recession in the coming 12 months from 35% to 25%.
This adjustment follows decreased stress in the banking sector and the signing of a bill by President Biden to suspend the U.S. government's debt ceiling, which will prevent a potential default. Goldman Sachs believes that the new debt ceiling will only result in minor spending cuts and keep the overall fiscal stimulus broadly neutral for the next two years. It also predicts that banking stress will only detract 0.4% from real GDP growth in the current year. Goldman Sachs now estimates the Federal Reserve's terminal interest rate to be between 5.25% and 5.5%, a forecast in line with Deutsche Bank and UBS, and predicts that the Federal Reserve will likely raise interest rates by 25 basis points in July. That would take the rate to their target range. So one more hike.
A snapshot of the market currently shows:
- Dow up 29.40 points or 0.09% at 33953
- S&P up 10.28 points or 0.24% at 4283.42
- Nasdaq up 43 points or 0.32% at 13272
Looking at the broad S&P index, the next target is the 61.8% of the move down from the 2022 all time high. That level comes in at 4311.69. The swing high from August 2022 comes in at 4325.28.
The Russell 2000 is outperforming today with a gain of 45.5 points or 2.52% at 1852.39
Looking at the daily chart below, the index is breaking above its 200 and 100 day MAs at 1811.34 and 1822.74 respectively. On Friday last week, the price closed above both MAs but fell back lower yesterday. The break higher today is with more momentum. The last time the price was above those key MAs was back on March 8th.