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Shares may build on the rise in the coming week as investors wait for Friday’s job report

Traders on the floor of the NYSE, May 6, 2022.

Source: NYSE

Shares can carry the momentum of this latest rally into next week as investors look forward to Friday’s job report.

All three major indices rose sharply in the past week, each rising above 6%. Both the S&P 500 and the Nasdaq Composite broke a seven-week losing streak, while there had been eight weeks of losses for the Dow Jones Industrial Average.

“I think this is the beginning of the long-awaited emergency meeting,”[ads1]; said Sam Stovall, investment strategist at CFRA Research.

In the four-day week ahead, there are only a handful of revenues, with reports from, Hewlett Packard Enterprise and online pet retailer Chewy.

The May employment report on Friday is the most important data on a calendar that also includes ISM production, vacancies, monthly vehicle sales and the Federal Reserve’s beige book, all on Wednesday.

“I think 325,000 consensus [nonfarm payrolls] number, we could easily dial. But it’s just math, “said Alex Chaloff, co-director of investment strategies at Bernstein Private Wealth Management. He noted that there may be positive revisions in last month’s data, as has been the case in recent reports.

Economists have expected that the pace of job creation will slow from 428,000 jobs in April. “You can not continue to grow at that rate, especially with Covid spiking. There is some air coverage for the 325,000s,” Chaloff said.

An improvement after Fed minutes

Shares over the past week were choppy, but rose sharply, especially after the Federal Reserve released minutes of its last meeting.

The S&P 500 increased by 6.5% to 4,158, the best week since November 2020. The Dow index rose 6.2%, while the Nasdaq was the best, up 6.8%.

“It was waiting for some kind of catalyst, and I think it got it from the Fed. Not only was it no longer hawkish, but it said it would appear to be accelerating interest rate tightening,” Stovall said.

“So I think a lot of investors thought they pre-loaded the rate hike cycle, suggesting they might end up stopping in the third quarter sometime,” he added. “I think that was the rally trigger. The market was just oversold in a breadth and sentiment perspective and was ripe for some kind of good news and the Fed delivered.”

Chaloff said the market expects the Federal Reserve to raise interest rates by 50 basis points, or half a percentage point, at each of the next two meetings. It may mean choppy trading during this period, but he added the first time the Fed returns to a quarter-point hike, the market should increase sharply.

“I think this is the early stage of a bounce, but we have a Fed meeting in June. We have a Fed meeting in July,” he said. “It will have an impact on the markets. It will have tremors when the Fed acknowledges that they have work to do. We are not saying this is the floor … But it’s great to see markets respond properly to solid macro data.”

For now, however, the shares may go higher. “I would say it has not been a completely crazy volume week, so it’s nice, it’s fun, it’s great to go into the long weekend, start the summer with a little strength, but the breadth and depth has not been there.” in Chaloff. “I want to say ‘Okay, everyone, we’re not dancing. We’re not there yet’ … We think we’re through the worst, but not all.”

Looking for catalysts

Chaloff said he will monitor whether hedge funds, which had downloaded inventory, begin buying in the coming week, a possible positive catalyst for the market.

“Weeks like this help to build on themselves, so even if it’s not a breakthrough week, it’s an important week,” he said.

Any development during the weekend can be important, but the weekends are also a time when investors reflect. “If you’re having a really bad week, and people can not move their money for 48 or 72 hours, you really have a bad opening to start the week,” Chaloff said.

Bond yields in the last week were lower and more even. The 10-year yield was about 2.74% on Friday.

“I think it’s positive for stocks and of course bonds,” Chaloff said. “After seven or eight weeks of outflows, you start getting inflows into interest rate instruments of all kinds, and that keeps returns limited.”

It is also positive for growth companies that were hardest hit when interest rates rose.

The markets close in May on Tuesday. As of Friday, the Dow and S&P 500 were both flat for the month, but negative for the Nasdaq.

Stovall said that June is generally positive for the S&P 500. “June usually has few fainting spells. It is in a way mediocre in terms of performance,” he said.

Week ahead calendar


Memorial Day holiday

The markets closed


Earnings:, HP, Ambarella, Victoria’s Secret, ChargePoint

9:00 S & P / Case-Shiller housing prices

9:00 FHFA housing prices

09:45 Chicago PMI

10:00 Consumer confidence


Earnings: Chewy, Hewlett Packard Enterprises, Michael Kors, Capri Holdings, PVH, Pure Storage

Monthly car sales

09:45 Production PMI

10:00 ISM production

10:00 Construction expenses

10:00 JOLTS

14:00 Beige goat


Earnings: Broadcom, Ciena, Hormel Foods, Asana, CrowdStrike, PagerDuty, Cooper Cos, Okta

08:15 ADP salary data

08:30 Unemployment claim

08:30 Productivity and costs

10:00 Factory orders


08:30 Employment

09:45 Services PMI

10:00 ISM Services

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