Gold Silver Reports – The Higher the Wall of Worry, The Faster the S&P 500 Climbs It — A constellation of risks that loomed on Monday, from trade tensions to the jobs report that wrecked equities last month, became reasons to buy by Friday afternoon. The S&P 500 Index ended up 3.5 percent on the week, volatility is rapidly abating and technology stocks are back at record highs.
Of course, the newsflow helped. Friday’s report showed bumper hiring without the prior month’s rapid wage gains. Donald Trump compromised on his tariffs. And a planned summit between the U.S. President and Kim Jong Un buoyed hopes of a diplomatic breakthrough on the Korean peninsula. Those developments have gone a long way to repair sentiment bruised by last month’s savage correction, restoring some of the composure that’s defined a bull market now heading into its 10th year.
“There was a feeling that the market was lost, now it seems that investors have more certainty,” Ian Winer, director of equities at Wedbush Securities Inc., said by phone. “The optimism that the economy isn’t at risk of overheating is a very welcome reprieve after all the volatility we saw last month.”
Busy Week
Investors began the week reeling from signs that the Federal Reserve may be faster on the draw when it comes to rate hikes and worry that Trump was spoiling for a trade war. But as early as Monday, signs emerged that the final policy on trade wouldn’t be as protectionist as many feared, a sentiment borne out Thursday when he signed an order full of carve-outs for key allies.
The trade angst helped domestically-focused small caps outperform, with the Russell 2000 surging more than 4 percent. Still, even multinationals in the Dow Jones Industrial Average managed to recoup last week’s losses, up 3.3 percent.
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Friday’s jobs report went a long way toward restoring confidence that the Fed isn’t behind on inflation, as hiring topped 300,000 jobs while wage growth fell short of expectations. Each of the four main equity indexes rose at least 1.6 percent on the day. The Cboe Volatility Index fell to the lowest since Feb. 1, the day before the market selloff began. – Neal Bhai Reports
