Market Intelligence
Bad jobs report, good for rate cuts!!!
The Asian markets were mixed, HK +0.87%, Shanghai +0.52% and Japan -0.85%. The Tankan Survey had mixed results. The tariffs are hurting Japan.
European markets were strong, Euro STOXX and DAX rose 0.98%. The EU Manufacturing PMI was 49.8 from 49.5. The EU CPI was 2.2% with the Core 2.3%.
In the U S, the ADP Report was a major surprise, -32,000 jobs and last month revised to -3,000 from 54,000????
The PMI was 52.0, unchanged. The ISM was 49.1 from 48.7.
S&P 500 +22.74, +0.34% to 6,711.
It opened at 6.665 , hesitated for an hour, and then climbed the rest of the day. It peaked at 6,717 around 3PM and closed at 6,6711.
The open was confusing because the ADP report was so bad. Within an hour the market decided it was positive. It increased steadily most of the day.
The key catalyst was the rally in bonds. The10 yr T bond rate slid 4.4 bps to 4,1016%. The futures market priced in a 100% chance of an October rate cut.
There were sharp moves in some key stocks. It felt like some managers who were planning to buy on a dip panicked and bought today. The ADP was a genuine surprise..
Drugs were strong again today. It looks like the concessions by companies took off the table Trump 100% tariffs was enough to create a rally in depressed stocks. Also, some shorts got squeezed.
The Shutdown had minimal impact. It will depend on how long it goes on.
The DJIA rose 0.09%. The NASDAQ gained 0.42% and the QQQ 0.48%. The IWM was +0.24%
WTI slipped further, 0.59 to 61.78!!! The Saudi’s cut prices on LPG. The XOP increased 1.7% and the XLE was unchanged?
The KBWB fell 1.5%. There are more reports of deteriorating credit conditions. Weak labor is a mixed input. The XLU rose 1%.
The VIX eked out a +0.1% to 16.29. This is the third day in a row the market is up and the VIX up?? The advances led today, the NYSE 1.4 to 1 and the NASDAQ 1.3 to 1. The NYSE volume was 20% above average. The NASDAQ was 70% above normal!!!
It was a surprise day!! The data was a positive for the Bulls.
Blub
Jerry