Stock Market Breadth And US NFP

Stock Market Breadth And US NFP

Today is the most important day of the week as today investors will get to see the US non-farm payroll data. On Wednesday, the US ADP number set a strong number for the US NFP as the economic number was much stronger than the expectation and it indicated that the US labour market could be in a health position.

The Fed who announced their monetary policy decision on Wednesday will also be watching this economic number very closely. Anything above the 500K is likely to send a hawkish message for the stock markets. If the US NFP data fall below the 300K number, it is possible that we may see a harsh sell-off in the markets as traders will take no time in booking the profit off.  After all the US equity markets is way overbought and they are well due for a correction.

What Did The BOE Say?

On Thursday, the Bank of England surprised the markets by not sending the hawkish message. The fact is that majority of the market players were anticipating a strong move from the BOE given the fact that the country has seen tremendous economic growth after the coronavirus pandemic. Despite the soaring inflation and inflation moving well beyond their comfortable boundary, the bank said that the surge in inflation is still transitory and it is highly likely remain like that for some time.

The sterling didn’t take the news that well and it lost its ground against the G10 currencies. Sterling is the worst performing G10 currency for this week and it is likely that the bearish trend may continue.

Asian Markets 

The Asian stock market traded mostly lower on the final trading day of the week. The Nikkei index declined 0.61%. The Shanghai index decreased by 0.71%, while the HSI index lost its value by 0.61%. The ASX index gained 0.39%.

Dow Jones and S&P 500: Market Breadth

The Dow Jones’ market breadth gained momentum yesterday. 78% of the Dow Jones stocks traded above their 200-day moving average. 

The S&P 500 stock breadth also revealed strengthened yesterday. 81% of the shares traded above their 200-day moving average. 

Dow Jones Futures Today

The Dow Jones futures are trading lower today. In terms of economic data, investors will be looking at the US NFP, which is due at 12:30 PM BST. The expectations are that we will see the reading of 455K for the US NFP while the previous number came in at 155K. We are also going to get the US unemployment rate today and the forecast for the unemployment number is to fall further to 4.7% from its previous reading of 4.8%. 

The Dow Jones futures have started to lose some momentum after posting a new record high this week. For the last past two days, we have seen bulls hesitating to challenge the all-time high, while the 100-day SMA continues to trade above 50-day SMA on the daily time frame which doesn’t really show a sign of strength for the bulls.

In addition to this, the RSI is still trading near the overbought area of 70 which means traders are unlikely to place some buy bets as the price is overbought and prone to some correction.  

The near-term support is at 35,556, while the resistance is at 36,111.    

Stock Market Rally

The S&P 500 stock index closed higher yesterday; the index increased by 0.42%. The information technology sector led the index lower and 6 out of 11 sectors closed higher yesterday.

The Dow index failed to soar yesterday; the Dow stocks moved the index lower by 0.09%. 13 shares declined, while 16 shares closed higher. 

The NASDAQ composite, a tech-savvy index, closed higher by 0.81% yesterday.

S&P 500 Leaders and Laggards: Teradyne Etsy and Penn National

Etsy stock contributed the biggest gain, soaring more than 10%. Penn National stock was the largest drag; it fell over 21%. The S&P 500 stock index is up 16.74% so far this year.

Dow Jones Leaders and Laggards: Merck and Dow Inc

Merck and Co provided the biggest help for the Dow Jones; it advanced by 2.07%, while the Dow Inc stock was the largest decliner, it fell by 3.18%.