Thursday, March 30, 2023

Strong Jobs Report Sends All Major Indices to New Highs


A strong jobs report gave investors a fantastic start to the long Fourth of July weekend, as each of the major indices finished Friday’s session at new closing highs. And yes, that also includes the Dow!

We’ve been thinking about the Government Employment situation report all week… and it was well worth the wait. The economy added 850,000 jobs last month, which jumped past expectations in the low 700Ks and was more than 200K better than the previous month.

Even though the print blew past Wall Street forecasts (unlike the May number), a lot of people are still calling this a ‘goldilocks’ report. It obviously shows an economy that’s rapidly getting back on its feet after an unprecedented interruption, but market watchers apparently feel that it’s not enough to force the Fed to accelerate a rate hike.

The end result on Friday was the S&P reporting its seventh straight record close by gaining 0.75% to 4352.34. The NASDAQ is also back at a new high with a rise of 0.81% (or nearly 117 points) to 14,639.33.

That’s the tech-heavy index’s first milestone since this past Tuesday. The Dow hadn’t seen a closing high since all the way back on May 7… until today that is. The index jumped 0.44% (or about 152 points) to a new record at 34,786.35.

For the week, the NASDAQ led the way with a 1.9% advance as tech remains the pride of the market. The S&P is really close with a 1.7% advance after setting records for seven straight sessions, while the Dow participated with a 1% advance over the five days.

Today’s report certainly attracted the lion’s share of attention this week, but we should remember that it’s actually the third positive jobs report in as many days. The ADP employment report on Wednesday easily beat expectations by adding 692K jobs in June, while the jobless claims report yesterday slipped back below 400K and surpassed expectations at 364K.

Add some other positive economic data, a strong earnings season (with a new one about to begin), a rapid vaccine rollout and a Fed that’s still being super supportive amid a ‘transitory’ rise in inflation; and its no wonder that the first half totals were so epic with hope for more in the second half.

Before we go celebrate Independence Day, let’s go over those first half results again… because they deserve to be repeated! The S&P soared 14.4%, the Dow jumped 12.7% and the NASDAQ rose 12.5%.

After such amazing performances, the editors are now wondering when the pullback will come. And they’re actually pretty excited because it gives them a chance to buy at more attractive prices. But let’s think about that next week and enjoy our nation’s birthday…

Today’s Portfolio Highlights:

TAZR Trader: Before the Fourth of July weekend begins, Kevin has a couple of buys for the portfolio, First of all, he picked up Chinese e-commerce giant Alibaba (NYSE:), which is down today after China proposes rules to punish illegal e-commerce pricing. The editor calls this “a minor slap on the wrist for BABA”, which the company will undoubtedly obey to stay out of trouble. Therefore, its an opportunity. The service also added Penn National Gaming (NASDAQ:), a $12 billion gaming enterprise that’s seeing sales snap back as the pandemic loses its grip. The company pre-announced strong preliminary Q2 results late last month, which bodes well for the report coming in August. Kevin added each with 5% allocations. Read the full write-up for more on these buys, including a look at what the analysts are saying.

Headline Trader: “Large-cap equities got a euphoric push into the long Independence Day weekend. This morning’s robust June employment report exceeded expectations while wage growth remained muted, driving a fresh wave of bullish sentiment into equities and bonds alike.

“We had a trifecta of record closes from all three of the large-cap indexes and marked the S&P 500?s 7th consecutive all-time high (the longest streak since last August). All the momentum is to the upside, but I am becoming increasingly nervous about the overbought territory that both the S&P 500 and closed at today.

“My outlook remains bullish for the 2nd half of 2021, but a market pullback may be necessary. As I have said in prior commentaries, there is a record level of sideline cash ($5.5 trillion in the money markets) just waiting to buy the dip.” — Dan Laboe

Counterstrike: “Goldilocks and the dead bears. Are there any shorts left?

“The S&P hit a record high for the 7th day in a row. This is the first time that happened since 1997.

“We continue to be in an astonishing bull market, but the opportunity feels limited at these heights. Let’s take it slow into earnings and look to manage the portfolio and raise some cash.” — Jeremy Mullin

Have a Happy 4th of July!
Jim Giaquinto

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