Morning Brief
Headline News:
The S&P 500 futures trade 31 points, or 0.7%, above fair value heading into the release of the March Employment Situation report at 8:30 a.m. ET. The Briefing.com consensus is projecting 474,000 additions to nonfarm payrolls, a 3.7% unemployment rate (versus 3.8% in the prior month), and a 0.4% increase to average hourly earnings — essentially a tight labor market that will factor into the Fed’s decision making. Investors will also receive the ISM Manufacturing Index for March (Briefing.com consensus 58.3%) and Construction Spending for February (Briefing.com consensus 1.0%) at 10:00 a.m. ET.
Some measures of support ahead of the employment report include first-of-the-month inflows as investors put new money to work after a two-day decline and news that virtual peace talks between Russia and Ukraine are continuing today.
In the Treasury market, the 2s10s spread went negative again last night but as yields pushed higher not lower. Presently, the 2-yr yield is up 11 basis points to 2.39%, and the 10-yr yield is up eight basis points to 2.41%. The U.S. Dollar Index is up 0.2% to 98.49. WTI crude futures are down 1.0% to $99.25/bbl.
(Michael Gibbs, Director of Equity Portfolio & Technical Strategy)
Markets:
The S&P 500 sold off below support at 4590.03, ended the day just above support at 4522.00, and closed lower at 4530.41. The trading came with higher volume as 2,638,743,808 shares were traded. Also, RSI moved lower to close at 56.28. We feel the majority of the selling was due to the end of the first quarter window dressing, but the index was also overbought, so today’s trading will give us better guidance about the future of the current uptrend.
We are currently Intermediate-term bearish and short-term bullish.
John N. Lilly III CPFA
Accredited Portfolio Management Advisor℠
Accredited Asset Management Specialist℠
Portfolio Manager, RJFS
Partner, DJWMG
Windsor Wealth Planners & Strategist
Futures trading is speculative, leveraged, and involves substantial risks. Investing always involves risk, including the loss of principal, and futures trading could present additional risk based on underlying commodities investments.
The Relative Strength Index (RSI), developed by J. Welles Wilder, is a momentum oscillator that measures the speed and changes of price movements.
The advance/decline line (A/D) is a technical indicator that plots the difference between the number of advancing and declining stocks on a daily basis. The indicator is cumulative, with a positive number being added to the prior number, or if the number is negative it is subtracted from the prior number.
The A/D line is used to show market sentiment, as it tells traders whether there are more stocks rising or falling. It is used to confirm price trends in major indexes, and can also warn of reversals when divergence occurs.
The percentage of stocks trading above a specific moving average is a breadth indicator that measures internal strength or weakness in the underlying index. The 50-day moving average is used for short-to-medium-term timeframes, while the 150-day and 200-day moving averages are used for medium-to-long-term timeframes. Signals can be derived from overbought/oversold levels, crosses above/below 50% and bullish/bearish divergences.
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S stock market. Past performance may not be indicative of future results. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investors’ results will vary. Opinions expressed are those of the author John N. Lilly III, and not necessarily those of Raymond James. “There is no guarantee that these statements, opinions, or forecast provided herein will prove to be correct. “The information contained was received from sources believed to be reliable, but accuracy is not guaranteed. Investing always involves risk, and you may incur a profit or loss. No investment strategy can guarantee success. The charts and/or tables presented herein are for illustrative purposes only and should not be considered as the sole basis for your investment decision. International investing involves special risks, including currency fluctuations, different financial accounting standards, and possible political and economic volatility. Investing in emerging markets can be riskier than investing in well-established foreign markets.
This is not a recommendation to buy or sell any company’s stock mentioned above.
US government bonds and treasury bills are guaranteed by the US government and, if held to maturity, offer a fixed rate of return and guaranteed principal value. US government bonds are issued and guaranteed as to the timely payment of principal and interest by the federal government. Bond prices and yields are subject to change based upon market conditions and availability. If bonds are sold prior to maturity, you may receive more or less than your initial investment. Holding bonds to term allows redemption at par value. There is an inverse relationship between interest rate movements and bond prices. Generally, when interest rates rise, bond prices fall and when interest rates fall, bond prices generally rise.