Market Direction Weekly Closing Numbers

Market Direction: BULLISH alert issued 6/2/2016

The economy

The stock market finished a range bound week on a relatively flat note as investors pored over the Employment Situation Report for September. Interest rate volatility remained at the forefront as participants assessed an evolving fed funds rate hike picture and further Brexit shocks from across the pond. The Nasdaq Composite (-0.3%) settled in-line with the S&P 500 (-0.3%) and slightly behind the Dow Jones Industrial Average (-0.2%).

Long-term interest rates struggled for direction as a mixed reading from the September employment report shifted the U.S. rate hike outlook. Headline nonfarm payrolls increased by 156,000 (Briefing.com consensus 176k) while August's reading was revised to 167,000 from 151,000. Furthermore, average hourly earnings increased by 0.2% (Briefing.com consensus +0.2%), which could pave the way to an increase in inflation expectations. Average hourly earnings growth also registered the largest year-over-year increase in several years.

The fed funds futures market responded by discounting the odds of a November rate hike and improving the outlook for a December hike. The implied probability of an interest rate hike at the December meeting increased to 69.5% from 63.4% in the prior session. Rate hike odds also improved as participants assessed remarks from Cleveland Fed President Mester (an FOMC voter) and Fed Vice Chair Fischer. President Mester stated that the employment report appeared consistent with her expectations while Mr. Fischer called the reading a "Goldilocks number.

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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	10/7/2016	Difference
Dow Jones	17,838.56	18,240.49	401.93
Nasdaq	4,971.36	5,292.41	321.05
S&P 500	2,105.26	2,153.74	48.48

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