The major indices are on course to end five-week winning streaks, but they remain within spitting distance of their recent highs. Furthermore, the bond market has experienced more dramatic activity this week, with the inflation report leading to a strong reversal of the recent decrease in the 10-year Treasury yield on Wednesday. Traders have begun to assume that the Fed is way behind the curve, and the Fed must recognise that the present inflation scenario is not transient.
Market participants expect that the Fed will raise interest rates sooner rather than later, perhaps by the third quarter of next year. However, if inflation data continues to skyrocket as it did yesterday, the Fed may begin raising interest rates even earlier.
Friday is comparatively quiet for investors after a hectic week of results and economic data releases. On Friday morning, the preliminary reading for November consumer confidence and the September data on job vacancies and labour turnover will be issued.
Gold was unchanged on Friday, but it was on track for its greatest weekly gain in six months, as strong consumer prices in the United States fuelled demand in the metal as an inflation hedge. Gold prices have profited from cheap monetary policies used to stimulate economic development during the epidemic, but any increase in interest rates will lessen the non-interest-bearing metal’s allure by increasing its opportunity cost.
Oil prices fell on Friday, erasing gains from the previous session, as the dollar rose on expectations that the Federal Reserve will announce plans to hike interest rates to combat inflation.
The Asian stock market traded mostly higher on the final trading day of the week. The Nikkei index increased 1.13%. The Shanghai index soared 0.23%, while the HSI index gained 0.19%. The ASX index gained 0.83%.
Dow Jones and S&P 500: Market Breadth
The Dow Jones’ market breadth lost some momentum yesterday. 75% of the Dow Jones stocks traded above their 200-day moving average. The S&P 500 stock breadth revealed strengthened yesterday. 79% of the shares traded above their 200-day moving average.
The Dow Jones futures are trading lower today. In terms of economic data, investors will be looking at the JOLTS data, which is due at 13:30 PM BST. The expectations are that we will see the reading of 10.02M for the JOLTS Job opening while the previous number came in at 10.4M. We are also going to get the US Consumer Sentiment today, and the forecast for the Consumer Sentiment number is to increase further to 72.5, from its previous reading of 71.
The Dow Jones futures have started to lose some momentum after posting a new record high this week. For the last past three days, we have seen bulls losing the battle against keeping the price in positive territory. The price has started its journey to move towards its important moving averages i.e. 50, 100 and 200-day SMAs. The price has been trading well above the these moving averages and it also pierced the upper line of the Bollinger band, which confirms that prices were overbought and a retracement was shortly on the cards. The near-term support is at 35,047, while the resistance is at 36,272.
Stock Market Rally
- The S&P 500 stock index closed higher yesterday; the index increased by 0.44%. 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 0.44%. 13 shares declined, while 16 shares closed higher.
- The NASDAQ composite, a tech-savvy index, closed higher by 0.52% yesterday.
- S&P 500 Leaders and Laggards: Freeport McMoRan and Walt Disney
- Freeport McMoRan stock contributed the biggest gain, soaring more than 9%. Walt Disney stock was the largest drag; it fell over 7.07%. The S&P 500 stock index is up 16.74% so far this year.
Dow Jones Leaders and Laggards: Walgreens and Disney
Walgreens Boots the biggest help for the Dow Jones; it advanced by 9%, while the Walt Disney stock was the largest decliner, it fell by 7.07%.