Market Direction: BULLISH alert
issued 6/2/2016
The economy
Despite the underperformance relative to the tech-heavy index, the S&P 500 still closed just below its all-time high with the bulk of the weekly advance coming in response to Friday's release of the June Employment Situation Report (287,000; Briefing.com consensus 175,000).
Post-Brexit concerns were cited for a defensive start to the week, but the cautious tone dissipated by the weekend, at least as far as the U.S. stock market was concerned. The S&P 500 flirted with a new closing record high on Friday after a strong jobs report overshadowed weak average hourly earnings growth (+0.1%; Briefing.com consensus 0.2%). The virtually nonexistent earnings growth likely contributed to the Friday rally in the market, since it will be used as an argument against a rate hike in the near term. Treasuries, meanwhile, dipped immediately after the report, but climbed into the afternoon to the end the week with solid gains, leaving the 10-yr yield at an all-time closing low of 1.368%.
Rate hike expectations, as indicated by the fed funds futures market, did inch up, but not enough to raise any serious concern among market participants. The fed funds futures market sees no chance of a rate hike in July while the implied probability of a hike in September or November is just over 10.0%. Even when looking one year out, the implied likelihood of a hike in June of 2017 is just 32.9%.
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By the numbers the weekly closing index numbers compared
to the initial BULLISH recommendation closing
numbers:
Stock Market Closing Numbers
|
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compared to Recommendation Numbers
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|||
6/2/2016
|
7/8/2016
|
Difference
|
|
17,838.56
|
18,146.74
|
308.18
|
|
4,971.36
|
4,956.76
|
14.60
|
|
2,105.26
|
2,129.90
|
24.64
|
|
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