The Fuse
Equity futures are rallying again this morning trying to follow up on Thursday’s very strong session. The markets are being lifted by strong earnings from Apple last night and a monster buyback plan. April jobs report will be a market moving event today.
Interest Rates are dropping a bit today as bond traders are back into buying fixed income. Hearing that the Fed is considered some sweeping changes to their QT program (less selling) is a relief. Yields coming down gently as well as the threat of a rate hike is likely off the table. Still, fed futures are only showing a 1-1/2 rate cut happening this year.
It’s all about the April jobs number today, that will move the markets. The report is estimated the economy grew nearly 200K jobs last month.
Crude oil is slightly higher while gold is down a fraction. In Europe the Stoxx 600 was up modestly, about .2% while the Hang Seng was up sharply, more than 1.6%. China and Japan were closed for trading.
Earnings last night from Apple were strong and with a a buy back to boot. Solid numbers from Booking but a disappointment from Expedia. Amgen is soaring on strong earnings and news, DraftKings beat nicely as did Block.
A strong day for stocks as the rally will likely continue into today following strong earnings and buybacks from Apple. The company beat handily and will buy back 110 billion dollars worth of stock, a huge deal for shareholders. Overall, the response to yesterday’s Fed meeting was decisive. The bulls see some light at the end of the tunnel, and that means we could see more money flowing into stocks later this month.
More strong breadth yesterday as the bulls pretty much had their way all session long. The oscillators are now firmly above zero, while new highs are still trying to get to a buy signal. Solid breadth on consecutive days is a good sign for the bulls, and considering Wednesday’s wild session it appears the buyers are stepping in on the dips.
Decent volume as the indices rallied again up to resistance. It is understandable that when a ceiling is hit we’ll see some volume erupt, that is what happened on Wednesday. What the bulls would like to see now is a bit of sideways, tight consolidation and then more volume as the indices start to break out. We’ll see if that happens with another big week of earnings coming up.
It was hard to explain the gyrations of Wednesday’s post-fed move, but certainly Thursday was explainable and due for the bulls. Following through on yesterday’s rally will be key. The IWM pushed right up against resistance at $200, if that is breached look for a quick move up to $210 to test recent levels.
Nasdaq continues to press on for a return to 18K, and the Industrials are likely to have a big day here on Friday with strong earnings from Amgen and Apple.
The Internals
What’s it mean?
A massive win for the bulls as the volume and advancers just exploded higher. The VIX tanked as it often does when news is released, while TICKS were green arrows nearly all session long, especially into the end of the trading session. VOLD and ADD were exceptional, closing near highs of the day. What would be nice for the bulls is some followthrough, and that could be happening following an exciting jobs report.
The Dynamite
Economic Data:
- Friday:NFP report for April, ISM non-manufacturing, SPX global PMI
Earnings this week:
- Friday:FLR, HSY, XPO
Fed Watch:
The third Fed meeting of the year as the committee grapples with higher inflation. That has been the case since the start of the year, a pretty frustrating situation for the committee. We have heard from several members there is no rush to cut rates. We may hear something from Chair Powell Wednesday to this effect. Fed futures are pretty much saying no more than one rate cut in 2024.
Stocks to Watch
Amazon – Earnings are out this week and the mega cap is looking to deliver another home run. The stock is well off the all time highs (10%)but could make a big run if investors appreciate what they deliver.
Federal Reserve – Big meeting again as our eyes/ears will be focused on Wednesday’s statement and the follow-on press conference. The committee is unlikely to move rates at this meeting but the tone may be more hawkish.
Employment – April’s job report is looking to be down from March, but only modestly. It has been the job market that has held the economy together, if it starts to falter the Fed may have to step in with some rate cut discussion.
