By Matthew Kerkhoff
Friday’s weaker than expected jobs report appears to be providing investors with a sigh of relief, as the prospect of higher rates momentarily dims. The shift has resulted in a weaker dollar and higher commodity prices, which are releasing pressure in financial markets. Junk bonds are rallying today, as are emerging markets.
As you can see in the chart below, U.S. stocks are following international markets higher. The pushing out of interest rate hike expectations has spurred a global rally and allowed some emerging market currencies to gain against the dollar, a positive development for those companies that have issued dollar denominated debt.
Early last week the S&P 500 tested the August 24th and 25th intraday and closing lows and the index held above that support. Since then, the market has rallied sharply. We now find ourselves bumping up against significant overhead resistance (chart below).
The two prior short-term rallies topped out ... Log in or subscribe to continue reading.