The U.S. market has been on a tear, thanks to the Federal Reserve’s benevolent 50 basis-point cut and increasing hopes of a soft landing.
Exuberance But Rational? The S&P 500 Index, a broader market gauge, is trading just shy of its all-time high, and the 30-stock Dow Jones Industrial Average is perched at a fresh intraday and closing high. After showing a muted reaction immediately after the first rate cut announced on Sept. 18, the major indices kicked into top gear.
Since the rate cut, the S&P 500 Index has added 1.8%. The week ended Sept. 27 saw the S&P 500, Dow and Nasdaq Composite indices advance 0.63%, 0.59%, and 0.95%, respectively.
Even as some on the sell-side and strategists point to more gains for the market going into the seasonally strong fourth quarter, a chartist and trader warned of a likely sell-off in the near term. The chartist going by the X handle @ChartingProdigy noted that the Dow Jones Industrial Average and the Dow Jones Transportation Average were diverging, which is a classic sell signal.
According to Dow theory, an uptrend in the Dow Industrials should be confirmed by a corresponding rise in the Dow Jones Transportation Average.
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Dock Workers Strike – Looming Risk? The chartist also noted that 45,000 dock workers will go on a strike, beginning on Oct. 1. “Biden has the power to stop it for 80 days, but he won’t for fear of ticking off unions,” he said, adding that the strike could stir worries about economy & inflation.
The International Longshoremen’s Association confirmed in a Facebook post on Sunday that “85,000 members of the International Longshoremen's Association, joined in solidarity by tens of thousands of dockworkers and maritime workers around the world, will hit the picket lines at 12:01 am on Tuesday, October 1, 2024, and strike at all Atlantic and Gulf Coast ports from Maine to Texas.”
It blamed the U.S. Maritime Alliance for not addressing a ” half-century of wage subjugation where Ocean Carriers profits skyrocketed from millions to mega-billion dollars” even as the wages of the union members remained flat.
“ILA unity remains strong and is growing,” it said in the post.
President Joe Biden refused to intervene in the strike, highlighting “collective bargaining” as the reason. As dock workers at ports from New England to Texas go on strike, even a short-lived work stoppage creates havoc in supply chains for weeks, The Washington Post reported. Each day a strike lasts could cost the U.S. economy up to $1 billion, the report said, citing analysts.
The SPDR S&P 500 ETF Trust SPY, an exchange-traded fund that tracks the S&P 500 Index, ended Friday’s session down 0.15% at $571.47, according to Benzinga Pro data.
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