A Non-Event …
The Employment Report was largely a non-event for the market, and did not prove to be a number we’d expect to spark a rally. S&P futures were trading up 650 at 1480.50. On the release of the Employment Report earlier this morning, S&Ps initially shot up to +900 on the day, and bonds were trading up 18/32.
The key hourly earnings number came in at +0.4%, which was in line with expectations. The headline payroll employment number was 208,000, which was a little more benign for the market than expected. Combining this number with last month’s Employment Report, this is beginning to show signs that the Fed’s tightening bias is working.
While the labor market remains tight, the hourly earnings and wage pressures are still not being seen. Overall, this is not a number that we’d expect a huge rally on. This is also taking some of the sting out of interest-rate fears. Now, as focus shifts to earnings reports, we expect erratic, choppy and range-bound trading ahead.
For today in S&Ps, 1483.50 to 1484 is a major number, which we need to get above for the upside to take hold. Then we have 1485.80, 1488.50, 1490.50-1491, 1495.50, and 1500. On the downside, we’re looking at 1477.50-1477, which is a key support, and critical at 1474.50-1475. Under that, we have 1466.50, key at 1465, and major support at 1460.50.
NASDAQ futures were trading at 3865, up 20. A 3895 Globex high made off the Employment Report and the low was 3827. Should be a very interesting day as tech stocks pushed higher yesterday, following Wednesday’s significant sell-off. One stock of particular interest to watch is MSFT, which was up 3.2% at a 2 1/2-month high yesterday, and up 34% since bottoming in late May.
On the upside, 3953 is a 100-day moving average; 3908 is a two-week high. Both these numbers should offer resistance. On the downside, 3787.95 is a nine-day moving average, and 3777 is a pivot point.
For the Dow, the blue chips consolidated yesterday. A key stock to watch is IBM, which had a drop of 3.1% yesterday after a downgrade in earnings estimates by Bear Stearns. The Dow is still confined to a range of 10,258 to 10,863, with a narrower band between 10,335 and 10,572.
We still believe 10,500 to be a psychologically important number. The market needs to close comfortably above this level in order to signal a break out of a triangle pattern and higher prices.