*Buy and Sell signals are not recommendations and are a starting point for further analysis.
U.S stock indexes this morning are modestly higher with the S&P 500 at a new record high. Stocks gained on better-than-expected U.S. economic data and on the IMF's hike in its global growth estimate for this year. However, gains in stocks were limited by Covid concerns, along with doubts about when Congress will approve new stimulus.
Today's U.S. economic data was bullish for stocks. The Nov S&P Core Logic composite-20 home price index rose +9.5% y/y, stronger than expectations of +8.9% y/y and the fastest pace of increase in 6-3/4 years. Also, the Conference Board's U.S. Jan consumer confidence index rose +2.2 to 89.3, stronger than expectations of 89.0.
Stocks garnered support today from the IMF's hike in its 2021 global growth outlook to 5.5% from a 5.2% projection in October, citing the rollout of Covid vaccines and more fiscal stimulus.
A bearish factor for stocks is the worsening Covid pandemic, which is forcing countries to tighten lockdowns that undercut economic growth and corporate profits. German Chancellor Merkel said today that Germany's management of the pandemic has "slipped out of control" and stricter curbs are needed to prevent a new wave of the disease. Globally, Covid infections have risen above 100.381 million, and deaths have exceeded 2.153 million.
Concerns that additional pandemic stimulus may be reduced and or delayed is a negative factor for stocks. Concerns are growing that the Biden administration may have to reduce the size of its $1.9 trillion pandemic stimulus package to get it passed by Congress. President Biden said he is open to negotiating his $1.9 trillion Covid relief package, which raises the likelihood that a smaller-than-proposed pandemic stimulus package may be forthcoming. Also, there is concern about a delay in any new stimulus measures after Senate Majority leader Schumer on Monday said he aims to secure passage of the next round of pandemic stimulus by mid-March.
There is also negative carry-over from today's -1.51% drop in China's Shanghai Composite index. Chinese stocks tumbled today after the People's Bank of China (PBOC) unexpectedly tightened liquidity by draining about $12 billion of cash from the banking system via open-market operations. Also, comments today from PBOC adviser Ma Jun weighed on stocks when he said that the risk of asset bubbles would remain if China doesn't shift its focus toward job growth and inflation management.
The VIX S&P 500 Volatility Index ($VIX) this morning is down -0.38 at 22.81, falling back from Monday's 2-1/2 week high of 26.63. The VIX is down sharply from last March's 12-1/4 year high of 85.47 but is holding above the late-November 10-1/2 month low of 19.51.