Thursday offered a reminder of an even stronger stock-market correlation that is alive and well — even more so then the oil-prices-down-stock-prices-up dynamic: if you give upside momentum an opening these days, it will be exploited.
Stocks surged Thursday, rising nearly 2%, and perhaps most importantly, closing at a high for the week despite the day’s volatility in oil prices, which ultimately settled 0.3% lower to move below $102 a barrel.
The Dow Jones soared 191 points to 12,258 and the S&P 500 jumped 23 points.
Similar to Wednesday, the outperformers were tech and small-cap stocks — when the majority of traders are away, the speculators will play. The Nasdaq gained 51 points to 2799, while the Russell 2000 climbed 2.2%.
As you’d expect, trading in other assets reflected the flight away from safety on Thursday. Gold and silver prices both shed 1.4%, retreating from all-time and 30-year-highs set on Wednesday. Natural gas slid 1.1% for the third straight day, and are now at three-and-a-half month lows.
Meanwhile, bond prices gained — and very quickly a 10-year note yield that earlier this week was threatening to go under 3.4% for the first time in more than a month has ballooned back to 3.57%.
Whether specific equity-sector analysis can be taken seriously on a broad rush like Thursday, the biggest gainers came where you’d expect, from stocks that have been beaten down this week with higher oil prices garnering most of the biggest headlines.
Trucking stocks (Old Dominion Freight (NASDAQ:ODFL) gained 5.7%, JB Hunt (NASDAQ:JBHT) rose 4.7%) and travel/tourism plays (Avis (NYSE:CAR) was up 6.3%, and Priceline.com (NADAQ:PCLN) added 3.5%) both came up big, while precious and specialty metals miners were generally lower.
And now here we are: with a big market push higher — to back within 1% of the highs of the year, but led by tech and small-cap stocks for a second straight day.
Friday brings the most important piece of economic data of the week with the employment report. This hasn’t always meant a lot for how an entire trading day will wind up, but anything perceived as remotely positive will play right into the hands of continued momentum higher.
