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Another Green Week Thanks to Jobs Report, Powell

Jim Giaquinto

After yesterday’s disheartening selloff, there were two things happening on Friday that we hoped could stop the bleeding: the jobs report and comments from Fed Chair Jerome Powell. Everyone’s fingers were crossed that the market would get good news on at least one of these fronts.

Well, both of them literally paid off for investors today! The major indices went on a broad rally that more than made up for Thursday’s Apple-inspired plunge.

Firstly, the economy added 312,000 jobs in December, which crushed expectations for under 200,000. The data was a nice change-of-pace from recent economic reports with more alarming results, such as yesterday’s soft ISM manufacturing index.

Usually such a strong number would have investors worried about the Fed getting more hawkish with rate hikes. But today, Mr. Powell was at a conference in Atlanta and said that the Committee would be “patient” with future increases as inflation remains muted. The market considered such statements to be more dovish than usual, giving stocks even more of a reason to rebound.

"The combination of the gangbusters jobs report, and Powell’s welcomed comments were just what the market needed to hear," said Kevin Matras in Options Trader.

"Throw in the growing optimism over the U.S.-China trade talks in Beijing next week, and it was the perfect recipe for a huge up move."

The NASDAQ soared 4.26% (or more than 275 points) in the session to 6738.86. The index plunged over 3% (or 202 points) just yesterday due to Apple’s warning on Q1 guidance. By the way, the iPhone maker got back a little more than 4% of yesterday's 10% plunge today. All of the other FAANGs had extraordinary days as well, especially a nearly 10% surge for Netflix.

The S&P added 3.43% to 2531.94, while the Dow climbed 3.29% (or nearly 750 points!) to 23,433.16. On Thursday, these indices slipped approximately 2.5% and 2.8%, respectively.

These performances gave the market a second straight week of gains with the NASDAQ up more than 2% and the S&P and Dow each higher by more than 1.5%. So January is already way ahead of December, which didn’t have a positive week until the very last one. Let’s hope it continues.

Next week picks up with fresh trade talks between U.S. and China officials in Beijing. Is it too much to ask that this good news continues and these two sides can finally put an end to this trade conflict? Of course, that’s too much to ask! Nevertheless, the market always appreciates when they are talking. Perhaps these “vice-ministerial level” officials can help further thaw the relationship and set the stage for a real breakthrough somewhere down the road.

Today's Portfolio Highlights:

ETF Investor: This New Year is only four days old, and we’ve already seen violent swings in both directions for stocks. So you can understand why Neena wants to add another “safe” ETF to the portfolio. On Friday, she picked up JPMorgan Ultra-Short Income ETF (JPST), which is an actively managed ETF that seeks to deliver current income while preserving capital. Ultra short-term funds have grown in popularity recently as investors shy away from taking too much interest rate risk amid a flat yield curve. Read the complete commentary for more on this new addition.

TAZR Trader: The S&P soared past 2520 on Friday on a strong jobs report and dovish sentiment from the Fed Chair. Given today’s epic rally, Kevin wants to ease into a short position as stocks approach resistance near 2550. The editor initiated a 5% “starter” position in ProShares UltraPro Short QQQ ETF (SQQQ) on Friday, and plans to add more next week if the rally continues. Read the full write-up for more.

Technology Innovators: The portfolio’s original plan was to wait for a pullback in Netflix (NFLX) before buying the streaming giant. The only problem is that the stock isn’t taking a break, which has forced Brian Bolan to chase the name a little bit. Therefore, the editor added NFLX on Friday, as he expects the stock to reach $330 in the next week or two. Read the full write-up for more.

Have a Great Weekend,
Jim Giaquinto

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