Fed Follows President Trump’s Lead, Stocks Soar

Fed Follows President Trump’s Lead, Stocks Soar


The S&P 500 gained 3.4% Friday, as Fed Chairman Powell signaled patience and flexibility on rates in light of stronger-than-expected jobs data.

The DJIA (+3.3%), the NAS Comp (+4.3%), and the Russell 2000 (+3.8%) also marked strong gains to finish the week + 1.6%, 2.3%, and 3.2%, respectively.

All 11 S&P 500 sectors closed the session in the Green, with gainers ranging from 1.0% (real estate) to 4.4% (information technology). 

The major averages began the day higher on optimism surrounding upcoming trade talks with China next week and a very strong Employment Situation Report for December.

NFPs (consensus 180,000) exceeded expectations with an increase of 312,000, while average hourly earnings (consensus +0.2%) increased 0.4%, lifting the Y-Y growth rate to 3.2%.

There were concerns about how the Fed would respond to the strong jobs report. The latest comments from Fed Chairman Powell eased those concerns. The market is pricing in an interest rate cut sooner rather than later.

Earlier, the The People’s Bank of China announced plans to lower its reserve requirement ratio in 2 separate 50-bpts cuts on 15 and 25 January. Currently, the RRR for large banks is at 14.5% while the RRR for smaller banks is at 12.5%.

Stocks ran due North to session highs and maintaining their gainers.

The CBOE Volatility Index (VIX) fell 4.1 pts to 21.38, reaching its lowest mark since mid-December.

Friday, the major US stock market indexes finished at: DJIA+746.94 at 23433.16, NAS Comp +275.35 at 6738.87, S&P 500 +84.05 at 2531.90

Advancing issues outnumbered decliners on the NYSE by a 7.64-to-1 ratio; on NAS Comp, a 6.22-to-1 ratio favored advancers.

The S&P 500 posted no new 52-wk highs and 1 new low; the NAS Comp recorded 5 new highs and 19 new lows.

Volume: Trade on the NYSE came in at 1.1-B/shares exchanged

  • Russell 2000 +2.4% YTD
  • NAS Comp+1.6% YTD
  • S&P 500 +1.0% YTD
  • DJIA +0.5% YTD

HeffX-LTN’s technical outlook for the major US stock market indexes Bearish to Neutral for the week ended 4 January 2019

Have a terrific weekend

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