The rally after Independence Day went into full gear yesterday, each of the main indexes capping off their 3rd consecutive winning day. The Dow Jones outperformed its competitors yesterday, something that hasn’t happened until trade war concerns took center-stage. This time around, though, financial and industrial stocks helped the Dow record a beautiful day, the blue chip index surging 1.31%. Finally, the Dow has gone back to trading up on the year, even if it means meager gains of 0.2%.
The S&P 500 approached the 2,800 point level with gains of 0.88% yesterday, while the NASDAQ rose by the same amount. The market continues to be impressed by the employment figures released on Friday – featuring 233 thousand new positions added to the American economy in June. The impressive employment report and the lack of new headlines about trade wars gave the rally the green light to continue. Investors are now readying themselves for the earnings season, hoping that it in its own right can command some of the market’s attention, keeping trade war fears at an abeyance for a slight reprieve.
The S&P 500 will now look to rally until the 2,800 point level come week’s end, with the bulls in the meantime relishing their victory over the economic headlines. Despite all of the negative potential out and about, the latest rally shows us that despite the trade war fears, the bulls are omnipresent. And the more the earnings season nears, investors want to buy up stock before companies release their numbers.
It would seem that investors have gotten the green light to rally higher over the rest of the summer – and maybe even to achieve an S&P 500 all-time high before the holiday season begins. Even though I’m donning the hat of a bull, it’s important for us to remind each and every one of our client base how easily that could change. The trade wars have not gone anywhere, and in the event they get worse, the bears will get back into the arena, and quickly at that!
As of now, the market is entering the earnings season with a certain degree of calm and serenity. Investors will let the earnings numbers go to work over the coming months, which should be positive for the market. This week begins relatively quietly, but the clip of the earnings season will pick up quickly with financial stocks at the end of the week. In a number of weeks, the FANG stocks will be reporting, which could certainly help the NASDAQ climb higher, in the event the numbers we get are solid.
In Summary: Stocks kicked off the week fantastically and are continuing last week’s rally. The earnings season will go into full gear next week. I expect a short-term rise in volatility and a continuation of the uptrend on the way to new index highs over the rest of the summer.
Today’s Picks – Day Trading!