US stocks cling to strong opening gains ahead of Fed decision

Major US equity indices opened in green and built on to early gains as investors await for the Federal Reserve's latest monetary policy decision.

At the time of writing, the Dow Jones Industrial Average was up around 90-points to 19,954, while the broader S&P 500 Index gained over 7-points to 2,286. Meanwhile, strong quarterly earnings report by Apple Inc. powered a strong rally in technology stocks, with the tech-heavy Nasdaq Composite adding 36-points and jumped to 5,650 level.

On the economic data front, ADP report showed strong private sector employment growth, with an addition of 246K new jobs during the month of January, while the final print of Markit's US manufacturing PMI for January was revised a tick lower to 55, as compared 55.1 reported earlier and 54.3 recorded in December. Meanwhile, the ISM manufacturing PMI surpassed expectations and came-in at 56.0 for January. Consensus estimates were pointing towards a reading of 55.0, up from previous month’s 54.7.

Further gains, however, seemed limited ahead of the Fed announcement later during the day. The US central bank is widely expected to leave its monetary policy unchanged, while market participants would be keen to scrutinize the committee's outlook on economic conditions.

Technical outlook

Carol Harmer, Founder at charmertradingacademy.com notes "we still are pointing lower on the daily and weekly charts and only the 60 min points higher....but that would do after the final 2 hrs range last night..we can come back and fill the gap to 2279...Now if we lose this support we still have the 2268/66 support...I believe only back below 2262 will there be the legs to go lower for the 2257 area where I think there will be a lot of short covering...."