Fund manager Louis Navellier stated that market momentum appears unstoppable, with the bias toward equities versus debt at its highest level ever, and corporate share buybacks also on the rise.
The ongoing momentum is likely to propel the market to new highs on Friday, with major index futures indicating a higher opening. The delay in the release of the September non-farm payrolls removes a key first-tier catalyst out of the purview of traders, albeit temporarily. The market will have other triggers to contend with, including headlines on the government shutdown, which is entering its third day.
As of 3:30 a.m. ET on Friday, the S&P 500, Nasdaq 100, and Dow futures were all up about 0.20%, while the Russell 2000 futures climbed a steeper 0.35%.
On Thursday, stocks overcame early jitters over the overbought market levels and the macroeconomic risks posed by the government shutdown. As IT, communication services, material, and industrial stocks lent support, the market reversed course and ended higher. The Nasdaq Composite Index joined the other major averages — the S&P 500, the Nasdaq 100, and the Dow Jones Industrials — in the record territory.
The SPDR S&P 500 ETF (SPY), an exchange-traded fund (ETF) that tracks the S&P 500 Index, and the Invesco QQQ Trust (QQQ) rose 0.12% and 0.41%, respectively. The SPDR Dow Jones Industrial Average ETF Trust (DIA) and the Shares Russell 2000 ETF (IWM) gained 0.25% and 0.39%, respectively.
Fund manager Louis Navellier said the market momentum appears unstoppable, with the bias toward equity versus debt higher than ever before, and corporate share buybacks also on the rise. “The willingness of the Fed to pursue a series of rate cuts while inflation hovers near 3% and the economy and stock market are humming only puts fuel on the fire,” the strategist said.
“Even if earnings slow, the dropping interest rates will motivate the $7.3 trillion in money markets to find better returns, unleashing a serious new bid for stocks, at least dividend-paying stocks.”
Navellier also weighed in on concerns about massive layoffs in the wake of the government shutdown, noting that the shutdown would have to last at least 61 days before permanent layoffs could be made. If it reaches this timeframe, it would mark the longest shutdown, he said. On a positive note, such a predicament would make the Fed more dovish, he added.
“But it may also all be over by this time next week, the 8-day average for shutdowns.”
Ryan Detrick, Carson Group’s Chief Market Strategist, flagged a historical data point that suggests further gains for the market. “When the S&P 500 makes a new high in October, the fourth quarter is up more than 90% of the time,” he said. The S&P 500 Index has already made new highs in two out of the two sessions of October so far.
In Friday’s session, traders will likely focus on a slew of Fed speeches and a couple of services sector activity readings for September. The S&P’s final service sector purchase managers’ index (PMI) is expected to be revised up to 54 from the mid-month reading of 54.9. In contrast, the Institute for Supply Management’s manufacturing PMI is expected to be 52 in September, holding just above the ‘50’ level that marks the boundary between expansion and contraction, and remaining unchanged compared to last month.
Among the Fed speakers for the day are:
- New York Fed’s John Williams: 6:05 a.m. ET
- Chicago Fed’s Austan Goolsbee: 8:30 a.m. ET
- Fed Governor Stephen Miran: 9:30 a.m. ET and 3:30 p.m. ET (TV appearances)
- Dallas Fed’s Lorie Logan: 1:30 p.m. ET
- Fed Vice Chair: Philip Jefferson: 1:40 p.m. ET
Crude oil futures rose early Friday, rebounding from a four-session slide, while gold futures traded off their all-time highs. The 10-year U.S. Treasury note yield edged up after retreating below the 4.1% level on Thursday. Meanwhile, the U.S. dollar was slightly higher against most major currencies.
Most major Asian markets that remained open for trading ended Friday’s session higher, thanks to the positive cues from Wall Street overnight and the general optimism toward the technology sector. The Hong Kong market retreated, while the Chinese market is on a weeklong recess for the “National Day” holiday, and South Korea’s Kospi, which hit a record high on Thursday, was closed for a public holiday.
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