November 7, 2022
Good morning,
The S&P 500 Index was down -3.35% last week, which was the first half of what I have called the current rally’s testing period. Recall the 4 events of the 2-week testing period: the Fed comments last Wednesday, Jobs data last Friday, the mid-term election tomorrow and CPI data on Thursday. The surprisingly hawkish comments from the Fed last week, set the market back by -4.6% through last Thursday’s market close. The test had “fail” written all over it after only one event. Friday’s employment numbers were a mixed bag and had something for bulls and bears. The market seemed to take the jobs data as a neutral event but got some help from rumors of the demise of China’s Covid-zero policy. I would suggest that the takeaway from the first week of testing is that our rally is on life-support but not dead.
Futures are up a smidge this morning (+.25%) which is a little surprising since it has had to shrug off the reiteration by China of its Covid-zero policy and crush the rumors that helped fuel Friday’s rally. Add to that some downward earnings revisions and some bad tech company-specific news (mostly layoffs), and there is every reason to expect the market to be lower this morning.
Let’s get past election day tomorrow – see you Wednesday morning.
Be well,
Mike