Market Direction Weekly Closing Numbers

Market Direction: BULLISH alert issued 6/2/2016

The economy

The stock market saw another week of limited movement, but managed to erase the bulk of last week's loss nonetheless. The S&P 500 added 0.5% thanks to a Friday rally, which took root after the release of a disappointing Employment Situation report for August.

According to the report, only 151,000 nonfarm payrolls were added, which was short of the Briefing.com consensus estimate of 180,000. Furthermore, average hourly earnings edged up just 0.1% (Briefing.com consensus 0.2%), leaving the year-over-year growth rate at 2.4%, which was down from 2.6% in July. The dollar dipped after the release, but rebounded as the day wore on.

As for the fed funds futures market, the initial reaction to the report saw a dip in near-term rate hike expectations, but only a portion of that move held. The implied likelihood of a hike in September ticked down to 21.0% from 24.0% while the probability of a December hike improved to 54.2% from 53.6% on Thursday.

In sum, the Employment Situation report was not weak enough to convince investors that a September rate hike is out of the question. The Treasury market agreed with that assessment, leading to some steepening in the yield curve on Friday as the long end underperformed.

With Labor Day around the corner, the upcoming weeks are expected to feature increased volume as market participants return from vacations.

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By the numbers the weekly closing index numbers compared to the initial BULLISH recommendation closing numbers: 

Stock Market Closing Numbers
compared to Recommendation Numbers
	6/2/2016	9/2/2016	Difference
Dow Jones	17,838.56	18,491.96	653.40
Nasdaq	4,971.36	5,249.90	278.54
S&P 500	2,105.26	2,179.98	74.72

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