September 28, 2023

The major averages put up back-to-back gains today after an early spike in yields and oil prices retreated in the afternoon. Economic data showed the US economy remained in good shape with Initial Jobless Claims increasing 2k to 204k, while Continuing Claims also came in below estimates. Q2 GDP was revised to +2.1% vs. +2.2% prior. Housing numbers disappointed however, as August Pending Home Sales fell -7.1% vs. -1% expected, and down -18.7% YoY as 30-year mortgages rose to +7.65%. Earnings were mixed with Jabil (JBL) surging +18.82% on strong results, but CarMax (KMX -13.36%) and Micron Technologies (MU -4.41%) sank after disappointing. The different indexes struggled for direction early but got an oversold bounce in the afternoon after crude oil prices slipped to $91.63 a barrel after crossing above $95 and yields retraced some of their recent gains. The rate on the 10-year Treasury finished at 4.578% after hitting 4.684% in the morning. The rebound was almost across the board with Communications Services (XLC) the strongest sector on gains in Meta Platforms (META) and Alphabet (GOOGL). Consumer Discretionary (XLY), Materials (XLB) and REITs (XLRE) also outperformed up more than +1%. Utilities (XLU) was the only market group to finish red. The DJIA was the weakest index weighed down by a -2.57% drop in Boeing (BA) adding 116.07 points (+0.35%) finishing at 33666.34. The S&P 500 added 25.19 points (+0.59%) and settled at 4299.70, while the NASDAQ jumped 108.43 points (+0.83%) and closed at 13201.28.

Breadth was positive with advancing issues beating declining issues 2.2:1 on the NYSE and 1.5:1 on the NASDAQ. Advancing volume was 72% on the NYSE and 60% of the NASDAQ. The VIX fell 0.88 (-4.83%) and closed at 17.34. Crude oil prices dropped 2.06 (-2.20%) and the November contract closed at $91.63 a barrel. Gold prices fell 7.30 (-0.39%) and finished at $1883.60 an ounce. Bitcoin (BTC) closed the session at $27,200.

Investors came off the sidelines as yields and oil moved lower and scooped up beaten down stocks. On a technical basis, the DJIA rallied up to resistance at its 200-day MA but was unable to punch through. Tomorrow, we get the PCE Price Index, which is the Fed's preferred inflation measure, and should be a market mover as a government shutdown will delay economic data including Jobs, CPI and PPI. If the PCE shows more progress in the inflation battle we could see stocks rally as the Market Edge/S&P Short Range Oscillator (SRO) finished the day at an oversold -5.43%.

Earnings releases to watch for on Friday include: Carnival Cruise Lines (CCL).

Friday's Market Moving Economic Calendar: International Trade in Goods, Personal Income and Outlays, Chicago PMI and Consumer Sentiment.

By David L. Blake, CMT