Stocks have been pressing lower of late because the bond rates proceed to rise. This had the S&P 500 (SPY) dangerously near the 200 day moving average. Yet hidden in the Friday Government Employment report was a clue that sparked a rally and perhaps puts an end to recent market weakness. Read on below for full details….
Straight away an important thing on investor’s minds is the dramatic rise in bond rates, and the way that makes stocks less attractive. I tackled that subject pretty thoroughly in my previous commentary this week. Make sure it read now in the event you have not already:
When is the Stock Bouncing Coming?
The short answer to the above query, is that the bounce may very well be forming now as stock flirt with the 200 day moving average at 4,206 for the S&P 500 (SPY). That’s the red line in the chart below.
On the basic front, if rates keep ripping higher, then it is going to only put more pressure on stock prices. I sense that 5% is a logical top for 10 yr rates…but who says that the market is logical?
Also note on the basic end of things that the economic reports proceed to return in positive. Even 20 months into probably the most aggressive Fed rate mountain climbing regime in history, GDP estimates proceed to be robust.
GDP Now has it their Q3 estimate all the way in which as much as +4.9% bolstered by probably the most recent ISM Manufacturing report. Further, the Blue Chip Economist panel sees +2.9% because the more logical growth trajectory.
If I were to position a bet in Vegas I’d say the Economists are much closer to the ultimate number. Regardless, it is difficult to have a look at these results and see a recession coming…and due to this fact it is difficult to be truly bearish.
On top of that the Government Employment Situation report got here out Friday morning much hotter than expected. Since a lot of the initial market response relies on just reading the headline…then yes stocks sold off early in the session.
Gladly, as prudent investors dug into the main points they found a hidden gem in the report. That being month over month wage inflation right down to only 0.2% which implies we’re ebbing ever closer to the two% inflation goal for the Fed as this “sticky” type of inflation becomes unstuck at such high levels.
As this recent spread…so too did the stock gains. As I put this commentary to rest with 90 minutes left in the Friday session we’ve got a +1.4% result for the S&P 500 and nicely above recently resistance at 4,300.
Back to the large picture conversation about higher rates….
Yes, stock prices are down of late as “rates normalize” to more traditional historic levels. Meaning we are not any longer having fun with the artificially low rates we which were in hand the past 15 years.
Once everyone makes this adjustment to the brand new world view of rates…and realize the world isn’t falling apart…they might be compelled to place their money into the perfect stocks. And perhaps Friday’s rally is an early sign of that going down.
So, that are those best stocks, you ask?
Read on below for the reply…
What To Do Next?
Discover my brand recent “2024 Stock Market Outlook” covering:
- Bear Case vs. Bull Case
- Trading Plan to Outperform
- What Industries Are Hot…Which Are Not?
- Top 11 Picks for the Yr Ahead
- And Much More!
Gain access to this vital presentation now by clicking below:
Wishing you a world of investment success!
Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)
CEO, StockNews.com and Editor, Reitmeister Total Return
SPY shares were trading at $430.05 per share on Friday afternoon, up $5.55 (+1.31%). Yr-to-date, SPY has gained 13.70%, versus a % rise in the benchmark S&P 500 index in the course of the same period.
In regards to the Creator: Steve Reitmeister
Steve is best known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, together with links to his most up-to-date articles and stock picks.
The post Investor Alert: Hidden Gem for Stocks Found in Friday Report appeared first on StockNews.com