Today is the most important day for the markets as the US Non-farms Payroll data will be released in the US. The bar is set high as traders are expecting nearly a million jobs. If the actual number matches the forecast of 978K, it will be the strongest reading for the US employment market since August last year. Investors believe that it is achievable as the coronavirus vaccine process has increased the economic activity in the US.
If the number matches the expectations or comes even higher, we could see the dollar index paring some of its losses although the gains may be short lived as the Fed is still unlikely to change its narrative on the monetary policy. However, if the number falls short of expectations, we are likely to see the equity markets selling off on the back of that as they are well due a profound healthy correction.
The Asian stock market traded mostly higher on Friday. The Shanghai index advanced by 0.34%. The HSI index increased by 0.67%, while the ASX index went up by 0.39%. The Nikkei index also surged by 0.28%.
Dow Jones and S&P 500: Market Breadth
The Dow Jones’ market breadth gained further momentum yesterday. 92% of the Dow Jones stocks traded above their 200-day moving average.
The S&P 500 stock breadth also displayed strength yesterday. 94% of the shares traded above their 200-day moving average.
Dow Jones Futures Today
The Dow Jones futures are trading almost flat on the final trading of the week. In terms of economic data, investors will be looking at the US NFP numbers as mentioned above. The forecast for US NFP is for 978K vs the previous reading of 916K.
The Dow Jones is on track to record serious gains for this week after posting two consecutive weeks of losses. The RSI shows on the weekly time frame that the price is overbought. This means that the index is well due for a correction. The Dow’s price action on the daily time frame also looks like it is topping out, however the bulls are still in control of the price because the price is trading above the 50,100 and 200-day moving averages.
The near term support is at 34,154, while the resistance is at 35,157.
Stock Market Rally
The S&P 500 stock index closed higher yesterday; the index advanced by 0.82%. The energy sector led the index higher and 10 out of 11 sectors closed lower.
The Dow index also increased yesterday; the Dow stocks moved the index higher by 0.93%. 25 shares advanced, while 5 shares closed lower.
The NASDAQ composite, a tech-savvy index, also closed sharply higher by 0.37% yesterday.
S&P 500 Leaders and Laggards: Iron Mountain and ETSY
Iron Mountain stock contributed the biggest gain, soaring 7.53%. ETSY stock was the largest drag; it fell by 14.56%. The S&P 500 stock index is up 10.84% so far this year.
Dow Jones Leaders and Laggards: Cisco and Caterpillar
Cisco system provided the biggest help for the Dow Jones; it advanced by 2.56%, while Caterpillar was the largest decliner, it fell by 34%.