As per usual lately, the weakness that started Tuesday didn’t last. The S&P 500 (SPX) rallied 0.3% Wednesday to a fresh new high at 4,358 after a release of the latest Fed meeting minutes, notes Jon Markman of Pivotal Point.
The blow-off rally that we told you to expect is hitting full stride. The index has been up 10 of the past 12 sessions, gaining 4.5% on the back of incredible strength for big-capitalization technology shares.
That may soon change. These blow-off rallies are predictable. Underinvested professionals typically circle back for laggards. Look for banks, industrials, and other economic-sensitive stock groups to take leadership into the middle of the month.
Cyclical stock groups were firmer Wednesday, and their emergence should help the S&P 500 easily stretch to my original target up at 4,400. Support is 4,214.
The Dow Jones Industrial Average climbed 0.3% to 34,681.79, while the Nasdaq Composite was nearly flat at 14,665.06. Materials and industrials were among the biggest gainers, while energy was the steepest decliner.
Minutes of the June 15-16 Federal Open Market Committee meeting did show further discussion of reducing the Fed's asset purchases and plans for more to come. However, there was general agreement that while the tapering could occur sooner than expected, conditions were not right to move forward right away. In short, it was "prudent" to begin preparations, but with no clear timeline on when to act.
Meanwhile, US job openings rose to 9.209 million in May from 9.193 million in the previous month, according to the Bureau of Labor Statistics. That missed expectations for 9.325 million openings in a Bloomberg survey. Hiring declined from April, an indication that businesses are still finding it difficult to fill vacancies.
West Texas Intermediate crude dropped 2% to $71.86 per barrel. No policy meeting is currently scheduled among members of the OPEC+ alliance after the group failed to reach a deal on supply quotas amid reported opposition from United Arab Emirates to the proposed increase in joint output from August.
"As OPEC+ has not been able to come up with some type of agreement, we could continue to see bearish pressure," a note from FXEmpire said.
In corporate news, Marketaxess (MKTX) shares fell 4.6% after Goldman Sachs, Piper Sandler, and Raymond James all cut their price targets for the institutional electronic credit trading platform.
Learn more about Jon Markman at Pivotal Point.