Stocks could build on next week’s gains as investors await Friday’s jobs report

Stocks could take on the momentum of this latest rally next week as investors look to Friday’s jobs report.

All three major indexes posted big gains over the past week, each up more than 6%. Both S&P 500 and Nasdaq Composite broke a seven-week losing streak, while it’s already been eight weeks of losses for Dow Jones Industrial Average.

“I think this is the start of a long-awaited drop in price,” said Sam Stovall, investment strategist at CFRA Research.

For the next four days, only a handful of earnings, with reports from, Hewlett Packard Enterprise and online pet retailer Tough.

Friday’s May jobs report is the most important data on the calendar, which also includes ISM manufacturing, employment data, monthly vehicle sales and the Federal Reserve’s beige book, all on Wednesday.

“I think 325,000 consensus [nonfarm payrolls] number, we can easily beat. But that’s just the math,” said Alex Chaloff, co-head of investment strategy at Bernstein Private Wealth Management.

Economists have predicted a slowdown in job creation from 428,000 jobs in April. “You can’t keep growing at that rate, especially given the spike in Covid rates. That’s a bit of a cover-up for the 325,000 figure,” Chaloff said.

Fed’s Minute Recovery

Stocks have been volatile over the past week but have rallied, especially after the Federal Reserve’s release minutes since its last meeting.

The S&P 500 rose 6.5% to 4,158, its best week since November 2020. The Dow gained 6.2%, while the Nasdaq was the better one, up 6.8%.

“It was waiting for some kind of catalyst, and I think it got it from the Fed,” Mr. Stovall said.

“So I think a lot of investors think they’re getting past the rate hike cycle, implying that they might take a pause into the third quarter,” he added. “I think that was the trigger for the rally. The market was just oversold on a sentiment and breadth front and was ripe for some kind of good news and the Fed delivered.”

Chaloff said the market is expecting the Federal Reserve to raise interest rates by 50 basis points, or half a percentage point, at each of the next two meetings. That could mean volatile trading throughout that period, but he added the first time the Fed gets back to a quarter point rate, the market will have a tough recovery.

“I think this is the early stages of the uptrend but we have the Fed meeting in June. We have the Fed meeting in July,” he said. “It’s going to have an impact on the markets. It’s going to be jittery when the Fed admits that they have work to do. We’re not saying this is a floor… But it’s great to see the markets reacting one way or another. appropriately with solid macro data.”

For now, however, the stock could move higher. “I can say it’s not been a really crazy volume week, so it’s great, it’s fun, it’s nice to go into the long weekend, start the summer off with some strength, but the breadth and the depth is yet to come”. Chaloff said. “I mean, ‘Okay, guys, we’re not dancing. We’re still not there “…We think we’ve made it through the worst of it, but not all.”

Looking for a catalyst

Chaloff said he will be watching to see if hedge funds, which are unloading their holdings, start buying next week, which could be a positive catalyst for the market.

“Weeks like this help build yourself up, so while it’s not a breakout week, it’s an important week,” he said.

Everything over the weekend can be important, but the weekend is also a time for investors to reflect. “If you have a really bad week and people can’t touch their money for 48 or 72 hours, then you really have a bad start to the week,” says Chaloff.

Bond yields have been lower and more stable over the past week. The 10-year yield was at around 2.74% on Friday.

“I think that’s positive for stocks and obviously for bonds,” Chaloff said. “After seven or eight weeks of outflows, you start getting capital into fixed-income instruments of all kinds, and that limits yields.”

It’s also a positive for the growth companies that are hit hardest by rising interest rates.

Markets close May on Tuesday. As of Friday, the Dow and S&P 500 were both flat for the month but negative for the Nasdaq.

June is usually a positive month for the S&P 500, Stovall said. “June is usually a little out of the blue. That’s average in terms of performance,” he said.

Week-by-week calendar


Memorial Day

Market is closed


Income:, HPAmbarella, Victoria’s Secret, ChargePoint

9:00 am S&P / Case-Shiller house prices

9:00 am FHFA house prices

9:45 am Chicago PMI

10:00 am Consumer confidence


Income: Tough, Hewlett Packard EnterprisesMichael Kors, Capri Holdings, PVH, Pure storage

Monthly car sales

9:45 am Manufacturing PMI

10:00 invent ISM

10:00 am Construction spending

10:00 am JOLTS

2:00pm Beige Book


Income: Broadcom, Ciena, Food containing hormonesAsana, CrowdStrikePagerDuty, Cooper CosOkta

8:15 am ADP payroll data

8:30 a.m. Unemployment claims

8:30 a.m. Productivity and costs

10:00 am Factory order


8:30 a.m. Jobs

9:45 am Services PMI

10:00 am ISM Service

Source link


News7g: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button