U.S. stocks rallied on Thursday, with all 11 S&P 500 sectors ending the day positively. However, the rally is taking an “Apple” interlude after the largest company in the world shares slid 3.5% in extended trading following their earnings report. As well, the market is likely pausing for cause ahead of NFP.
However, with the U.S. Treasury yields on the downslide and the market being the forward-looking machine that it is, the concentration risk damage was nowhere near as expected, especially with investors enjoying the latest central bank dove fest with other strong earnings releases coming from surprising places. Indeed, the market’s dovish Fed interpretation contributes to the bounce in some of the less-loved nooks of the market.
Asian stocks are coat-tailing the bullish momentum in US stocks and long-dated Treasuries as investors read in the tea leaves the strong possibility that the Federal Reserve has completed its cycle of rate hikes.
Thursday’s US macro data was dovish. Or at least that’s the way the market should interpret it. As usual, there’s no guarantee traders will contiue to see it that way, as Friday’s NFP report will decide the macro week.
With markets moving into the Goldilocks zone, the upcoming payrolls report might be pivotal because too hot or cold could swing the pendulum to more “watchful waiting” to see how the Fed responds or, worse, more imminent recession fear if the print misses by a wide margin. But coming in near or on the breadth of economist’s guesses would probably hit a high note for investors.
With a dreadfully weak ISM report market still in the market headlights, Investors certainly don’t want to navigate an NFP clunker.
Oil prices slightly increased during early Friday trading, with West Texas Intermediate, the US benchmark, trading above $82 after a 2.5% gain on Thursday. In addition to the risk-on bounce and declining Venezuela exports, we think some pre-weekend short covering drove the oil markets rally. Gold remained stable, and Bitcoin showed little change after a guilty verdict was delivered against Sam Bankman-Friend in a criminal fraud case.
As far as gold, when Gundlach, Gross and Druckenmiller are all on the same page,” RATES SHOULD FALL AS THE US MOVES INTO RECESSION”, historically, that trio singing for the same song page has been a solid signal. Check that ISM data; those are dark manufacturing clouds and will garner all manner of attention from the macro bear crowd, probably in a delayed fashion as soon as some bad data comes down the pipe, maybe even tonight’s NFP. I guess the only worry since bond yields are still pretty strong and will be for a while, is an unlikely sooner-than-expected Middle East detente.