Can The Employment Miracle Continue?

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Posted: Feb 07, 2020 11:20 AM
Can The Employment Miracle Continue?

Source: AP Photo/Lynne Sladky

The coronavirus continues to linger, but the fear pendulum has shifted from a global pandemic to missing this equity block party. Once again, all three major indices are higher on a continued flow of strong economic data, and perhaps it’s a chance for Washington, D.C. to hit the reset button.

  • S&P 500: +3.6%
  • NASDAQ Composite: +6.7%
  • Dow Jones Industrial Average: +3.0%
  • Russell 2000: +0.5%

The search for value continued in a week that has seen the resurrection of beaten-down old favorites, such as International Business Machines (IBM) and Biogen Inc (BIIB). Twitter (TWTR) joined the party after inventing a valuation metric (measurable daily active users) and then blowing it away. 

S&P 500 Index

+0.33%

 

Communication Services (XLC)

+1.25%

 

Consumer Discretionary (XLY)

 

-0.22%

Consumer Staples (XLP)

+0.17%

 

Energy (XLE)

 

-1.02%

Financials (XLF)

 

-0.13%

Health Care (XLV)

+0.09%

 

Industrials (XLI)

+0.32%

 

Materials (XLB)

 

-0.05%

Real Estate (XLRE)

+0.43%

 

Technology (XLK)

+0.91%

 

Utilities (XLU)

+0.03%

 

Can Boeing Get Airborne?

Speaking of beaten-down stocks that can move the entire market, few publicly traded companies are more important than Boeing (BA). The hits keep coming for the 737 Max, but there is a sense they will be back in action sometime this summer.

The stock has made a series of lower highs. Most likely, that reverses with a close above $355.00 - from there, the stock could travel to $400 very quickly.

Market Breadth

Although the market staved off early weakness, it’s clear 1,100 Dow points in four sessions feel toppy; hence, the market breadth saw more decliners than advancers, although 52-week highs dwarfed 52-week lows:

NYSE

  • 1,404 advancers
  • 1,508 decliners
  • 261 - week highs
  • 32- week lows

NASDAQ

  • 1,496 advancers
  • 1,678 decliners
  • 184 new highs
  • 47 new lows

Earnings Parade

After the close on Thursday, a big slew of names beat the Street, and offered guidance that sent their share prices higher:

  • Pinterest (PINS)
  • Uber (UBER)
  • Penn National Gaming (PENN)
  • Wynn Casino (WYNN)
  • Silicon Motion Technology (SIMO)

Portfolio Approach                   

We added a new Technology idea to the model portfolio.

Jobs Report

Today, all eyes will be on the jobs report for January 2020.

Forecast

  • Total Non-Farm Payrolls: 163,000
  • Private Payrolls: 150,000
  • Manufacturing: -1.000
  • Unemployment Rate: 3.5%
  • Average Hourly Wages: 0.3

Today’s Session

The January nonfarm payroll came in at 225,000 new jobs, of which 206,000 were in the private sector.  Hourly wages increased 0.2% for the month and are up 3.1% year over year.  The unemployment rate ticked up to 3.6%, but that is largely in part to the Labor Participation rising to 63.4%.  December was revised higher to 147,000 from 145,000 and November’s numbers increased to 261,000 from 256,000.

The markets are under pressure this morning.