Stocks Continue Winning Streak

In another stellar week for stocks, benchmark US stock indices continued to climb and make new all-time record highs. In what has only happened a handful of times in trading history, Nasdaq 100 index futures, traded on the CME, have not closed in the red for the past 11 consecutive trading days. What also might seem unbelievable, Nasdaq 100 index futures are officially up more than 20% for 2017.  Evidently, market participants have had no hesitation to buy expensive stocks with lofty valuations.

However, this truly historical stock rally is not just confined to the country with the largest economy in the world. Japan’s Nikkei 225 stock average index soared past 20,000 for the first time in history, and other markets seemed to tag along for the ride in overnight US trading on Friday. England’s FTSE 100 index made a new all-time high during Friday’s trading. Similarly, Germany’s DAX 30 index, rallied past 12,822.94 thereby making a new all-time record high. It’s safe to say stocks around the world are being purchased en masse. But can it last? Most analysts concur the answer lies in the economic data.

Despite a small sell-off due to a weaker than expected job’s report on Friday, stocks around the world quickly recovered. Economists were forecasting somewhere around 180,000 new jobs for the month of May, but only 138,000 jobs were added. Often times when jobs reports disappoint, the reaction in the market can be mixed. Occasionally, a weak jobs report is healthy for the market, because it indicates the Federal Reserve might be more cautious to raise interest rates.

The underwhelming jobs report certainly assisted the gold market, as spot gold soared 0.80% to climb above $1,280 a troy ounce upon news of the weak than anticipated report. Traders are now pricing in a slight possibility of a delay in an interest rate increase that was originally expected this month.

“This is undoubtedly a weak jobs report, especially with downward revisions. But it’s just one data point that will not change the Fed’s course, which is to raise rates at its June meeting,” said Michael Antonelli, equity sales trader at Robert W. Baird & Co.

Regardless of the outcome of the Fed’s meeting in the coming weeks, stocks and gold have appreciated almost in unison this year. Despite the seemingly endless gains in the stock market this year, gold is still outperforming the S&P 500. Gold is currently up 10.31% for the year while the S&P 500 is up 9.34%. The only asset (besides live feeder cattle) that tops the Nasdaq 100’s impressive 20% YTD gain is palladium which is currently up 22.70% for the year.

Meanwhile, in other global economic news, the price of crude oil continued to sink last week and weigh heavily on shares of companies in energy sectors around the world.

Moving forward in the weeks ahead, all eyes are still glued on the president’s every move as well as the Fed’s every move, because both entities evidently have an increasing effect all markets around the world.