Hi Everyone,
The S&P 500 and the Nasdaq finished higher for the third straight session, as the market-leading tech benchmark proved its strength yet again, closing at its highest level ever. The Dow was down 78 or 0.3%, to 25,735, the Nasdaq gained 96, or 1.0%, to 10,155, while the S&P 500 rose by 16, or 0.5%, to 3,116. Advancing issues outnumbered decliners by a 3-to-2 ratio on the NYSE, where volume was somewhat heavier than it has been of late.
Traders said that while today’s session was mixed “under-the-hood,” the relative strength of domestic stocks remains apparent despite the global headwinds. As one trader explained, “As the old adage goes, ‘Never short a dull market…’, and we got another confirmation of the wisdom as, despite the scary virus-related headlines, investors focused on the tech sector’s bright future and the improving vaccine outlook, and gobbled up stocks ahead of the long weekend.”
The holiday-shortened week has been as bullish as it gets so far, with three positive sessions in a row in the face of scary COVID-related headlines. The key economic releases leaned bullish today, and the fact that the Chinese and European forward-looking measures were also positive means the global economic recovery could gain speed. Treasury yields rose for the second day in a row, confirming the improving outlook, gold also pulled back in the wake of the positive vaccine-related news, while the Volatility Index (VIX) hit its lowest level in over three weeks.
The protests against the new Chinese national security law flared up again overnight in Hong Kong, just one day after Chinese leader Xi signed the bill that is threatening the autonomy of the special territory. The protests led to over 200 arrests already under the new law, and analysts fear that the legislation could lead to violence and political instability in the city-state. Most western nations, including the U.S. and the U.K., spoke up against the law, but China seems adamant to take a harder stance in Hong Kong, and direct conflict between the superpowers is highly unlikely.
The minutes of the Fed’s latest monetary meeting were released this afternoon, but following Chairman Jerome Powell’s recent testimonies, we didn’t get meaningful new information. That said, the minutes confirmed that the Central Bank will likely continue its asset purchases “for years” and that outright yield curve control, essentially fixing Treasury yields at certain levels, is off the table, for now. Volatility remained very low in the second half of the session, as trading activity did not pick up in the wake of the Fed’s release.
The government jobs report will be the undoubted star of the show tomorrow, but the weekly number of new jobless claims could also have a significant impact on stocks. As for non-farm payrolls, the consensus estimate calls for an increase of 3 million following last month’s surprise jump of 2.5 million, and in light of today’s upbeat ADP payrolls number, the job market recovery likely continued in June. The unemployment rate is forecast to drop to 12.4%, hourly earnings are expected to fall by 0.8%, while factory orders are predicted to jump by 8.6%.
As always, have a great evening and stay tuned!!!
Joe
