Another weekly gain? U.S. stocks are higher this morning as the S&P 500 Index tries to eke out its fourth straight positive week. The benchmark closed at yet another record high on Wednesday following the Federal Reserve’s third straight rate cut, but stocks sold off on Thursday amid pessimistic trade headlines. Nevertheless, the push to record highs could signal more strength ahead. Historical analysis shows that S&P 500 new highs have been followed by squarely positive returns over the next six months. If stocks drop, we see technical support near 2,950 for the S&P 500, as well as the 200-day moving average of 2,885.
Best two months of the year. Stocks are also entering the strongest period of the year, so seasonality could provide an extra boost to equities. Since 1950, the S&P 500 has risen an average of 1.5% in November and 1.6% in December, its best average monthly gains of the year.
October payrolls beat expectations. Job growth continues to slow, but hiring still looks solid at this point in the economic cycle. Nonfarm payrolls increased 128,000 in October, higher than consensus estimates for an 85,000 gain and despite 42,000 job losses in the automotive industry due to the General Motors strike that has since been settled. August and September’s job gains were also revised up by 95,000. The monthly average payrolls gain has been 175,000 over the past 12 months, around the average pace for the expansion. We’ll dig into the October jobs report more today on the LPL Research blog.
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