Stocks just posted the first streak of back-to-back monthly gains since 2021, with a gradual upward trend punctuated by a sharp rally on the last day of November.

S&P 500 and Dow in detail

Technically, the S&P500 closed back above its 200-Day Moving Average for the first time since March on a trifecta of bullish headlines i.e., Fed Chair Jerome Powell delivering a more dovish speech than the trade was anticipating, the Chinese easing Covid restrictions in some parts of the country, and the US House of Representatives passing a resolution 209-137 that would force railroad unions to accept a tentative agreement reached earlier this year between railroad managers and their workers and make an imminent strike illegal.

Technically, the Dow is now no longer in a "bear" market, having risen +20% from its most recent low. Year-to-date, the Dow is still down -4.7%, while the S&P 500 is down over -14% and the Nasdaq is down almost -27%.

Bulls however have a renewed sense of optimism after Fed Chair Jerome Powell delivered slightly less hawkish remarks, the Fed chief indicated that interest rate hikes would be scaled back to 50-basis points starting at the December 13-14 meeting. Still, Powell repeated previous warnings that Fed policy will likely still have to remain tight "for some time" to restore price stability and said substantially more evidence of declining inflation was still needed.

The real bullish takeaway from Powell's comments, however, is that Fed's target rate for this tightening cycle would likely only be slightly higher than previously forecast in September.

The median projection at that time was for rates to top out at 4.6%, which implies a target range of 4.5% - 4.75%. The benchmark currently sits at 3.75% - 4%. Bulls are also getting a boost from a flurry of economic data that indicates clear signs of a slowing US economy. Remember, "bad news" is played as "good news" in this world because it means the Fed will slow down on tightening.

Labor market

One area of particular focus for the Fed has been the ultra-tight jobs market. Good news on that front was found in the Job Openings and Labor Turnover Survey yesterday which showed a decline of -353,000 openings from the previous month.

The more important test will be the November Employment Report due out on Friday. Data from ADP yesterday showed a much less-than-expected gain in private payrolls of just 127,000 and bulls are hoping that same weakness is revealed in the official data.

On the flip side, third-quarter GDP was revised up to an annualized +2.9% from a prior estimate of +2.6%, which some bears view as a sign that the Fed's tightening campaign still has much further to go.

There remains a good deal of unease about the inflation trajectory due to a still-strong US consumer, as well as the many uncertainties surrounding global oil supplies.

Oil prices yesterday moved higher after data showed US stockpiles fell by the most since 2019 last week, according to Energy Information Administration. With Russian supplies set to be disrupted, China maybe reopening soon (big maybe), and OPEC waffling between production cuts and increases, oil traders are expecting more volatility ahead.

It's worth noting that US gas prices have moved substantially lower, hitting an average of $3.50 a gallon yesterday, according to AAA. Some experts think the national price average could slide below $3 by Christmas. On the surface, that sounds great for inflation but keep in mind, that means more money in consumer pockets, which in turn could boost discretionary spending and continue to buoy inflation.

Data to watch

Today, investors are anxious to see the PCE Prices Index, one of the Fed's favorite inflation gauges. Wall Street is expecting year-over-year inflation will drop to +6% from +6.2% previously. ISM Manufacturing and Construction Spending data are also due today.

Earnings of interest today include ChargePoint, Dollar General, Kroger, Nintendo, and Ulta. 

No Representation Is Being Made That Any Account Will Or Is Likely To Achieve Profits Or Losses Similar To Those Discussed Within This Site, Support And Texts. Our Forecasts and other Texts on this Website Should Be Used As Learning Aids. If You Decide To Invest Real Money, All Trading Decisions Are Your Own. The Risk Of Loss In Trading Commodities and Stocks Can Be Substantial. You Should, Therefore, Carefully Consider Whether Such Trading Is Suitable For You In Light Of Your Financial Condition. Futures and stock trading is speculative. It involves the potential loss of investment. Past results are not necessarily indicative of future results. Futures trading is not suitable for all investors.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD falls back toward 1.1150 as US Dollar rebounds

EUR/USD falls back toward 1.1150 as US Dollar rebounds

EUR/USD is falling back toward 1.1150 in European trading on Friday, reversing early gains. Risk sentiment sours and lifts the haven demand for the US Dollar, fuelling a pullback in the pair. The focus now remains on the Fedspeak for fresh directives. 

EUR/USD News
GBP/USD struggles near 1.3300 amid renewed US Dollar demand

GBP/USD struggles near 1.3300 amid renewed US Dollar demand

GBP/USD is paring back gains to trade near 1.3300 in the European session. The data from the UK showed that Retail Sales rose at a stronger pace than expected in August, briefly supporting Pound Sterling but the US Dollar comeback checks the pair's upside. Fedspeak eyed. 

GBP/USD News
Gold hits new highs on expectations of global cuts to interest rates

Gold hits new highs on expectations of global cuts to interest rates

Gold (XAU/USD) breaks to a new record high near $2,610 on Friday on heightened expectations that global central banks will follow the Federal Reserve (Fed) in easing policy and slashing interest rates. 

Gold News
Pepe price forecast: Eyes for 30% rally

Pepe price forecast: Eyes for 30% rally

Pepe’s price broke and closed above the descending trendline on Thursday, eyeing for a rally. On-chain data hints at a bullish move as PEPE’s dormant wallets are active, and the long-to-short ratio is above one.

Read more
Bank of Japan set to keep rates on hold after July’s hike shocked markets

Bank of Japan set to keep rates on hold after July’s hike shocked markets

The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session. 

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures