The S&P 500 closed last week at all-time highs. And today, it continues to climb up, hitting new records.
RDM CIO Michael Sheldon said it is likely that the market will remain volatile as ahead are very important reports on US manufacturing and employment.
But looking more closely, trading on Monday took a different tone than on Friday, when Powell reassured the markets that the Fed is not necessarily close to raising short-term interest rates and that high inflation is likely to be temporary. At that time, small-cap stocks, whose performance is more sensitive to the economy, performed much better. Growth was slower yesterday because of decreased home sales in July, which fell 1.8% month-over-month.
As noted above, ahead is the employment report for August, which will give investors a chance to see how early termination of unemployment benefits will affect the sector. The program is scheduled to end on September 6, so the full impact will be seen in October.
But even if investors want to see the US economy add jobs at a healthy pace, too strong performance could have negative consequences for the stock market. Sheldon said a figure above one million could provoke the Fed to cut monthly bond purchases faster than expected.
JJ Kinahan, chief market strategist at TD Ameritrade, said the same.