S&P 500 Fails to Break Important Barrier Once Again

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Just as the S&P 500 appeared poised to finally crack the 2,100 barrier, stocks backed off following the worst jobs report in five years. The S&P 500 closed the day off 0.3%, the Dow Jones Industrial Average fell 0.2%, and the Nasdaq and Russell 2000 lost 0.6%.

The U.S. economy only added 38,000 jobs in May, while the consensus had expected 160,000, and the March and April jobs numbers were revised lower. The labor force participation rate fell to 62.6% from 62.8% a month ago, so the drop in the unemployment rate to 4.7% from 5% was also a negative.

The poor jobs data seemed to put to rest thoughts of an interest rate hike in June. Some economists are projecting that there will be no increase before the presidential election in November.

As would be expected, financial stocks were hurt most by the jobs numbers, with the Financial Select Sector SPDR Fund (XLF) down 1.4%.

Utilities were the best-performing sector, rising 1.6%. Notable gainers included Consolidated Edison, Inc. (ED), up 2.3%, and Public Service Enterprise Group Inc. (PEG), up 1.1%.

The yield on the 10-year Treasury note fell to 1.71% from 1.81% on Thursday, as bonds rose. The U.S. dollar fell 1.7% against a basket of 16 currencies. Gold added 2.5% at $1,240.10 an ounce, and WTI crude oil lost 1.1% to $48.62 a barrel.

At Friday’s close, the Dow Jones Industrial Average fell 32 points to 17,807, the S&P 500 lost 6 points at 2,099, the Nasdaq was off 29 points at 4,943, and the Russell 2000 dropped 6 points to 1,164.

The NYSE Composite’s primary exchange traded 913 million shares with total volume of 3.6 billion. The Nasdaq crossed 1.7 billion shares. On the Big Board, advancers outpaced decliners by 1.2-to-1, and on the Nasdaq, decliners led by 1.6-to-1. On the NYSE, block trades increased to 5,588 from 5,179 on Thursday.

For the week, the Dow fell 0.4%, the S&P 500 was flat, the Nasdaq rose 0.2%, and the Russell 2000 gained 1.1%.

S&P 500 Chart
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Chart Key

As I mentioned, the S&P 500 once again failed to pierce the barrier at 2,100. Mike Antonelli, an equity sales trader at Robert W. Baird & Co, pointed out that the index has climbed above 2,100 more than 30 times only to pull back below it.

I believe the barrier is closer to 2,105, but the fact remains that sellers overwhelm buyers at this general level.

Dow Jones Utility Average Chart
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The Dow Jones Utility Average, however, had no trouble breaking to a new high on Friday. It smashed through its prior high at 672.40, made in May, with a new intraday high at 675.46.

Conclusion

The only sectors to advance Friday were defensive ones: gold, utilities, health care, consumer staples, materials and telecommunications. This is generally an indication that riskier sectors like technology and biotech are overpriced and due for a correction.

However, I’ve rarely observed a market that has sustained so many obstacles and still held to a narrow bullish range.

In Raymond James’ Morning Tack, Jeff Saut quoted Jason Goepfert of SentimenTrader, who said, “The S&P closed at a six-month high. When it has managed to do that before the Nonfarm Payroll report, it rose the day of the report 75% of the time.”

But I would ask, “How many times has it risen after such a crummy jobs report?”

I revert to being cautiously bearish.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.


Article printed from InvestorPlace Media, https://investorplace.com/2016/06/daily-market-outlook-sp-500-fails-break-important-barrier/.

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