Stocks pushed Thursday to another record close. The S&P 500 bounced to 4,536, a gain of 0.3%, explains Mike Larson, editor of Safe Money Report.
It was the 54th record close this year and comes one day ahead of the August non-farm payroll report. Normally stocks drift ahead of the monthly payroll number yet cyclical stocks were extremely strong all session. Based on the price action for banks, industrials, and energy issues, pros are betting August payrolls will exceed the consensus estimate of 720,000 new jobs.
If the jobs number is disappointing, the market response is likely to be positive because it will be seen as a signal that the Federal Reserve will support the economy with cheap money and suppressed interest rates.
In short, other than the fact the rally from the August lows has been unusually relentless, there is no immediate reason to be bearish. September should be a positive month, defying its century-long reputation for trouble, doubt, paranoia, and sadness.
Trends in motion tend to stay in motion. Following the path of least resistance is one of the oldest cliches in the investing world for a reason: It works. The next obvious upside target for the benchmark S&P 500 is 4,600. There is critical support at 4,475 and 4,400 if bears get frisky. Buyers should return at those levels if a decline should emerge.
The Dow rose 0.4% to 35,443.82 while the Nasdaq Composite was higher by 0.1% at 15,331.18. Itsy bitsy gains but we’ll take them. Dumb but relevant fact: If the market rose every session in a year by 0.1% it would clear a 25.2% return. Energy and healthcare stocks led the way while the technology and consumer sectors lagged.
Breadth favored advancers 2-1, and there were 820 new highs vs. 37 new lows. Big caps on the new high list included ASML Holding (ASML), Netflix (NFLX), Danaher (DHR), Accenture (ACN), and IQVIA IMS Health (IQV). These names should look familiar as they have been on our buy list for years.
West Texas Intermediate crude oil jumped 1.7% to $69.72 a barrel. The 10-year US Treasury yield was down 2 basis points at 1.29%. Initial jobless claims declined to 340,000 for the week ended Aug. 28, from 354,000 the prior week, according to the US Department of Labor. Analysts expected 350,000.
In other economic news, the US trade deficit narrowed to $70.1 billion in July from a revised $73.2 billion in the previous month.
In corporate news, Quanta Services (PWR) said it agreed to acquire Blattner, a provider of utility-scale renewable energy infrastructure services in North America, for $2.7 billion. Shares surged 12%.
Autodesk (ADSK) fell 5.2% after JPMorgan Chase, Morgan Stanley, Stifel and Mizuho Securities cut share-price targets for the design software company following its analyst day presentation.
Safe Money Report focuses on these kinds of stocks, which include names in the consumer staples, food and beverage, retail, and healthcare sectors. Visit Safe Money Report here.