Stocks rally following positive jobs report as investors raise expectations of a Fed rate hike next week

Market confidence is back up after ADP released a private-sector jobs reports which beat expectations. The report claims that the U.S. added 298,000 private-sector jobs in February. These figures are the highest since April 2014. The report also seems to suggest the Labor Department’s nonfarm payrolls report will beat expectations. These numbers are also significant because they will inform Fed thinking going into next week, when decisions on raising interest rates will be made. Federal Reserve Chairwoman Janet Yellen had previously suggested that interest-rate hikes are on the table barring any economic data that would dissuade Fed officials.  On the other hand, investors are growing wary of the timeline to implementation of the policy agendas which had driven much of the post-election Trump rally.  

The DJIA is currently down 0.13%, or 26 points, at 20,899. The Nasdaq-100 is up 0.14% at 5,842.05 and the S&P 500 is currently trading at 2,367.16 which is down 0.05% from the open.

Using the ^GSPC symbol to analyze the S&P 500, our 10-day prediction window shows four sessions of upward momentum followed by slight negative corrections. Positive vector figures climb from 0.11% today to 0.25% in the next three trading sessions. Today’s support and resistance is 2,366.21 (± 3.67) and 2,384.26 (± 3.70), respectively. The predicted close today is 2,371.28.   

Upcoming Events & Reports

Nonfarm payrolls are due to be reported this Friday at 8:30 a.m. Eastern Time. The recent ADP private-sector jobs report has investors optimistic about this follow-up report. These numbers will also lend to speculation around an expected interest-rate hike from the Fed next week.

Oil

Crude oil markets see more of the same action today, with new U.S domestic crude supply figures released. The U.S Energy Information Administration has reported today a 8.2 million barrel increase for last week. This amounts to a record-setting weekly level of 528.4 million, and marks the ninth consecutive weekly increase. U.S domestic production increases are countering global production caps set by OPEC, keeping the per-barrel price for West Texas Intermediate in the mid-$50s range. West Texas Intermediate for April delivery is currently priced at $52.44 per barrel, down 3.54% from the open.

Looking at USO, a crude oil tracker, our 10-day prediction model shows negative signals building incrementally. Vector figures show +0.06% for today , followed by negative figures climbing toward -0.55% and above toward the end of the prediciton window. All vector figures are based on today’s market conditions. The fund is currently trading at 10.87, which is down 3.55% from the open. Today’s prediction sees support at 11.27 (± 0.04) and resistance at 11.48 (± 0.04). The predicted close for today is 11.31.

Gold

Gold for April delivery is down 0.65%, or $7.90 today at $1,208.40 a troy ounce. The outstanding ADP private-sector jobs report released today is driving investment back into stocks while also lending strength to the U.S dollar ahead of an expected interest-rate hike from the Fed.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows mostly downward momentum for gold prices. Relative to today’s conditions, the negative vector values oscillate around -0.50% before climbing toward -2%.  The gold proxy is currently trading at 115.09, down 0.59%. Today’s predicted low is 114.48 (± 0.32) and the predicted high is 115.78 (± 0.32). The predicted close today is 115.27 with a vector value of -0.53%.  

Treasuries

Yields on treasury bonds are on the rise following the ADP jobs report which further solidified expectations of a Fed rate hike next week. There is a 91% chance priced into the Fed-funds futures market for a interest-rate raise after the March 14-15 Fed meeting. The yield on the 10-year Treasury note is up 1.48% at 2.57% after climbing 5.2 basis points today.

Using the iShares 20+ Year Treasury Bond ETF (TLT) as a proxy for bond prices in our Stock Forecast Tool, we see initial negative movement in our 10-day prediction window. Relative to today’s conditions, we see vector figures mostly stalling in the next few trading sessions before dropping toward -1%.  The ETF took is currently priced at $117.62- down 0.68% from the open. The predicted close today is $118.78 with a low and high of 117.30 (± 0.39) and 119.17 (± 0.39), respectively.  

Volatility

The CBOE Volatility Index (VIX) is currently down 1.05% at 11.33.  Relative to today’s conditions, the 10-day prediction window shows strong downward movement. The predicted close today is 10.73 with a negative vector of 2.31%. Today’s predicted lows and highs are 10.66 (± 0.18) and 11.45 (± 0.19), respectively.

Other News

Caterpillar Inc. (CAT) appears to be under tax investigation following a three-pronged raid of its Illinois facilities and headquarters last week. Although formal charges have not been made, a federal report obtained by The New York Times alleges the construction firm used complicated financial techniques to bring billions of dollars in offshore money into the U.S without paying taxes. This was apparently in service of propping up share prices through fraudulent financial reporting. Caterpillar’s share prices are currently down 1/72% at $94.78.