Stocks End Higher, S&P And Nasdaq Close At Their Best Levels Since June's Lows Were Made Image: Bigstock Stocks surged yesterday with the Dow up 1.29%, the S&P up 1.56%, and the Nasdaq up 2.59%. Yesterday marked the highest close for the S&P and the Nasdaq since the lows were put in on June 16th. (The Dow logged their second highest close.) That puts the Dow up 9.64% since the lows were put in, the S&P is up 13.3% since then, and the Nasdaq is up 19.0% since last month's lows. Granted, all of the indexes are still down double-digits from their highs. But it's been a spectacular rebound so far. Strong earnings continue to lift stocks. As do better than expected economic reports. MBA Mortgage Applications rose 1.2% with purchases up 1.0% and refi's up 1.5%. Motor Vehicle Sales yesterday came in at 13.3 million units (annualized) vs. the consensus for 13.5M. But it was above last month's print of 13.0M. North American-Made Sales beat both last month and expectations with 10.7 million units vs. last month's 10.3M and views for 10.4M. The PMI Composite report came in at 47.7 vs. last month's 47.5 and views for the same. The Services Index came in at 47.3 vs. estimates for 47.0. The ISM Services Index rose to 56.7 vs. last month's 55.3 and the consensus for 53.0. And Factory Orders rose 2.0% vs. last month's upwardly revised 1.8% and expectations for 1.1% this month. Today we'll get the Challenger Job-Cut Report, Weekly Jobless Claims, and the International Trade in Goods and Services report. But the report everybody is really waiting for is Friday's always important Employment Situation report. That's expected to show 250,000 new jobs were created last month (220K in the private sector and 30K in the public), while the unemployment rate held steady at 3.6%. This month's report will take on added significance since some have dismissed the weaker GDP numbers last quarter (2nd quarter in a row of negative GDP), as not indicating a recession because of the strong labor market. We've been averaging 375,000 new jobs per month for the last 3 months. While nobody is expecting that this month (again, the consensus is for 250K), a strong showing will be needed to keep that narrative alive. But we've got plenty of reports to focus on until then. And plenty of earnings with another 708 companies on deck to report today. It's been a fantastic earnings season so far. And there's still plenty more to go. True, inflation is still at 41-year highs. And the economy has slowed. But stocks tanked in the first half as traders feared the worst, i.e., a long and hard recession. While we did get a recession (that was confirmed after Q2's GDP came in a -0.9%, following Q1's -1.6%), earnings are strong, and the economy is showing great resiliency as aggregate demand continues to impress. The economy won't be stetting any growth records anytime soon. But it is growth that's expected with full-year GDP expected to come in at 1.7% this year. And that means the worst-case scenario that traders were pricing in earlier this year appear to be way overdone. And that's why stocks are rallying. If you found yourself selling at the lows last month when things were at their worst, and are now watching stocks surge higher, and you're are wondering what to do, be sure to read our latest commentary... Did You Sell At The Lows (Or Worse, Short At The Lows), And Are Wondering What To Do Now? Best, Kevin Matras Executive Vice President, Zacks Investment Research |
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