Stocks started Friday sharply lower, then worked all the way back to unchanged into the close. The S&P 500 ended at 4,455, a gain of 0.15%, says Jon Markman, growth stock specialist and editor of Strategic Advantage.
The problem for bears is downside momentum and time are running out. Only a few days remain in September, and October is traditionally a stronger month – especially when rising out of a recent low.
Professional money managers, who have been largely negative or neutral, and thus are carrying a lot of unproductive cash, are going to be forced back into the market for a likely Q4 rally.
Critical support is now 4,310 for the benchmark S&P 500. Resistance is 4,487, then the record high at 4,500. I suspect it is time to get ready for a big move up. When these advances from an emotional low get rolling, they go higher and last longer than most expect.
The Dow Jones Industrial Average rose 0.1% Friday to 34,798, while the Nasdaq Composite closed marginally lower at 15,047.70. Banks, oil drillers, and railroads fared the best, while health care and real estate stocks lagged.
Decliners outpaced advancers by a 4-3 margin and there were just 164 new one-year highs vs. 134 new lows. Topping the new high list were Salesforce.com, Thermo Fisher, Texas Instruments, McDonalds, Snap, Conoco Phillips, Devon Energy, and Gartner. Pretty diverse group, which is nice.
The 10-year US Treasury yield rose five basis points to 1.46%, the highest since mid-July after the Federal Reserve earlier this week signaled plans to reduce asset purchases.
Sales of new US single-family homes rose 1.5% in August from July. The average price held steady at $390,900, as homebuilders began catching up with the pandemic-fueled surge in demand by boosting the inventory of unsold homes to a 13-year high.
"As the economy recovers from this pandemic shock, its path is likely to confound our assumptions about what a return to normal might look like. The same is true for the monetary policy normalization process," said Kansas City Federal Reserve Bank president Esther George in a speech Friday. George, a monetary policy hawk, pointed to persistent reports of labor shortages, saying many older workers have retired permanently since the pandemic started.
Nike (NKE) shares slumped 6.2% after the athletic footwear manufacturer cut its full-year revenue guidance for 2022, citing factory shutdowns and shipping delays amid the Covid-19 pandemic.
Vietnam, where most Nike shoes are made, ordered factory shutdowns during the summer to stem the spread of Covid-19 infections that have already cost the company 10 weeks of output, with phased reopening now slated for October and several months needed to ramp back up to full production, an exec said on the fiscal first quarter earnings conference call. At the same time, "already long transit times worsened," he said, according to a Capital IQ transcript.
Costco (COST) reported supply chain struggles as well, limiting purchases of paper goods, water, and cleaning supplies newly in demand amid the latest Covid-19 wave. Chief financial officer Richard Galanti said the annual inflation rate on the goods the warehouse retailer sells has risen to a range of 3.5% to 4.5%, up from the estimated 2.5% to 3.5% last quarter. Costco's stock fared better than Nike's, rising 3.3% after quarterly earnings exceeded analysts' expectations.
Meredith (MDP) shares jumped 26% after The Wall Street Journal reported IAC/InterActiveCorp (IAC) has pulled ahead of a rival bidder in talks to buy the magazine publisher of titles including People and Better Homes & Gardens. IAC shares rose 5%.
Bitcoin slumped 4.2% Friday and other digital currencies declined as well after China declared all cryptocurrency transactions illegal, extending an industry crackdown.
