S&P 500; US Indexes Fundamental Daily Forecast- Uncertainty Over Jobs Data Could Limit Gains

After being called weaker on the cash market opening due to lower futures markets, the major U.S. stock indexes turned higher on Wednesday following the release of strong economic data. The buying was strong enough to once again launch the Dow Jones Industrial Average and S&P 500 Index to new record highs.

In the cash market, the benchmark S&P 500 Index settled at 2537.74, up 3.16 or +0.12%. The blue chip Dow Jones Industrial Average finished at 22661.64, up 19.97 or +0.09% and the tech-based NASDAQ-100 Index closed the session at 6533.67, up 1.96 or 0.03%.

The Dow notched an intraday record high. The S&P 500 also extended its winning streak to seven days, its longest since May and the NASDAQ Composite managed closing and intraday records.

The indexes continue to benefit from technical upside momentum created by its breakout over September’s high.

Strong U.S. economic data also supported the turnaround in the stock market.

According to ADP, U.S. private employers added 135,000 jobs in September, exceeding economists’ expectations even as the hurricanes “significantly impacted smaller retailers.” Traders were looking for a gain of 131,000. Last month’s report was revised down to 228,000.

The ISM Non-Manufacturing Index rose to its highest level since August 2005 in September and the prices paid index reached its highest level since February 2012. The ISM Services Index came in at 59.8, beating the estimate of 55.5.

Late in the session, Fed Chair Janet Yellen did not comment on the economy or monetary policy in prepared remarks at a community banking conference on Wednesday.

The market action late Wednesday seemed to indicate that investors have priced in the news that U.S. President Trump will appoint a less hawkish head of the Federal Reserve than previously expected.

Forecast

On Thursday, investors will get the opportunity to react to the Challenger Job Cuts report, weekly Unemployment Claims and Factor Orders.

FOMC Members Jerome Powell and Patrick Harker are scheduled to speak.

In June, Philadelphia Federal Reserve Bank President Patrick Harker said that the U.S. central bank remains on track to meet its inflation goal and reiterated his support for a further two interest rate increases this year. This likely means he is going to deliver a hawkish speech.

Powell was recently interviewed by President Trump to replace Fed Chair Yellen. Experts say he would not be a large step away from a Yellen-led Fed and would thus represent policy continuity for markets.

Profit-taking or position-squaring ahead of Friday’s U.S. Non-Farm Payrolls report is possible today, but this won’t mean the trend is changing. It will likely mean that investors are uncertain about the U.S. jobs data because of the impact of hurricane’s Harvey and Irma.