Can US leading indices print new records?
While the week ended with mixed reactions in the markets, pricing on holding the ultra-dovish policies by FED can encourage the markets to go forward. On the flip side, market sentiment can be discouraging and lost the hopes of faster recovery, holding back them from new investments.
Leading indices have different reactions to data and news. NASDAQ is the tech-based index, where you can find most of the tech-giants there. What we learned in the past year and a half since the pandemic started, Tech stocks usually have a positive reaction to the virus spreading and a negative reaction to re-openings. At the same time, while currently weaker US economic data means more support and later tapering, and NASDAQ used this advantage as well to close 0.21% higher.
Friday’s labor market data was shocking. We saw another actual effect of Covid-19. nonfarm payrolls increased by 235,000 jobs in August, way less than even most worse estimates and widely missing the estimates of 750,000 estimates. What we could see is that the leisure and hospitality sectors almost did not add any new jobs. This is was evident in the US ISM service PMI as well, by missing the estimates.
In reflection, The S&P 500 lost 0.03%, to close flat at 4,535.43, Dow Jones Industrial average fall as much as Do jones gained, to close both respectively down at 35,369.09 and up at 15,363.52. For the week, the S&P rose 0.6% and the Dow dipped 0.2%. For the week, the S&P closed up by 0.6% gain and the Dow dipped 0.2% and NASDAQ ended the week with 1.48% to test a new all-time high.
For the week ahead, after such a data that we had in the past days, and while the S&P 500 and the Nasdaq printed all-time highs over the past few weeks on support from great earnings reports, investors will remain generally cautious as they watch economic indicators and the new infections in the US to see how that might influence the Fed and its tapering plans.
