S&P 500 was once again led by Nasdaq higher on soft-landing-perfect manufacturing PMI to complete prior day‘s inflation relief. Bringing great gains swing and intraday, these times of soft landing narrative still being the mainstream one (and it got much needed boosts lately) bring finest stock market appreciation. As I had been saying in our intraday channel Friday, 5125 is nowhere near the top – it‘s only when the data come in too good (hinting at no landing) or too underwhelming (suggesting recession) that risk taking in equities gets a hit.
And for all the establishment and household job surveys diverging significantly for practically half a year already, and unemployment rising throughout much of US, incoming data, fiscal dominance and Treasury General Account with reverse repos don‘t suggest that the end of the bull run would be knocking on the door.
The bout of Nasdaq outperformance returning, and semiconductors doing well – these are as essential as cyclicals kicking in and biotech dealing with Thursday‘s weakness. Increasing odds of both May and Jun rate cuts (May though isn‘t realistic – they won‘t cut unless something breaks, and for all the noises in financials and CRE, there is no imminent danger).
What is though clear, is that stocks couldn‘t care less about inflation becoming sticky / troughing / whatever you call this 1970s like experience to come. Looking at ISM prices paid and CPI lagging those prices, we have good two months if not more till inflation truly starts raising its ugly head again. Thursday‘s core PCE was nothing, and equities duly rallied on them – but you know that already, and benefited greatly whether in stocks or real assets – the bull flag got its proper resolution, and sectoral breadth is demonstrably taking S&P 500 higher.
The latest earnings push came from DELL, and you remember me covering it as a good AI play already late 2023. See also consumer stocks, not just discretionaries but staples also waking up, crypto names continuing the ride from the Feb breakout paving the risk taking way. Russell 2000 with all the lagging regional banks and Thursday biotech wobble isn‘t a selling candidate either, to put it mildly.
Let‘s move right into the charts (all courtesy of www.stockcharts.com) – today‘s full scale article contains 4 of them, featuring S&P 500, sectoral picks, precious metals and oil.
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Gold, Silver and Miners
Gold confirmed it wasn‘t and isn‘t to retreat – the yellow metal also feeds on soft landing data. See how it didn‘t really retreat even if the Fed doesn‘t indicate readiness to cut rates soon.
Crude Oil
Crude oil is of course lagging behind oil stocks, but still participating in the rally – in a timid way, still being short-term „vulnerable“ to modest and not stellar gains, grinding towards $82.50 slowly.
Copper is displaying similar pattern, likely to consolidate $3.85 area before going for $3.90 again.
Related: Stocks Should Be Falling Right Now