Oh happy days: Stock market melt up continues

Another day, another rally.  Last week I correctly anticipated a positive spin on the latest payrolls report.

“In light of the recent market melt-up, is there much doubt that unless the report is a true outlier like a negative number or over a million, that traders will interpret the result in a bullish light, no matter what?,” I wrote.

Right on cue, a better-than-forecast number lifted stocks.

With an addition of 531,000 non-farm payrolls when 450,000 were expected, the number was sufficient to continue the uptrends that appear firmly in place.

Covid Pill

I’m not going to give myself much credit for such an obvious call.  Besides, there was a major piece of positive news that was already working its way through the market psyche. 

A new pill from Pfizer (PFE) that appears to sharply reduce the likelihood of Covid-related hospitalizations is one more possible signal that we can put the virus behind us in my opinion. 

This is on top of similar news from Merck (MRK) that was released on October 11th.  It is probably not a coincidence that the S&P 500 (SPX) bottomed 2 days later and began an almost interrupted move higher since then. 

Jobs Numbers

Today’s payrolls report was not exactly a Goldilocks number.  That would imply “not too hot, not too cold”.  There was nothing cold about today’s statistics. 

Besides a headline beat of 81,000, we saw a positive revision to last month’s number of another 118,000.  All of a sudden, last month’s miss doesn’t seem so bad, and we ended up with a total beat of 199,000 today.  Let’s call it 200k for simplicity’s sake. 

The unemployment rate fell to 4.6% vs, last month’s 4.8% and an expected 4.7%. Average hourly earnings rose 0.4%, as expected.  Taken in combination, this is a very solid improvement in the labor picture, but not enough to spur the Federal Reserve into more immediate action. 

Anything that keeps Papa Bear away from Goldilocks is a market-friendly number in my opinion.

What’s Next?

Looking ahead to next week, the major releases are the Producer and Consumer Price Indices (PPI, CPI) on Tuesday and Thursday respectively.  Market expectations are so high that once again it would take truly astounding numbers to shake the market’s good mood. 

The market expects rises of 0.6% and 0.5% for the respective headline numbers and rises of 0.5% and 0.4% for the cores.  With the word “transitory” still in the picture, anything other than substantial rises in the ex-food and energy numbers (for those of us who neither eat nor drive?) could be taken in stride by investors. 

Higher commodity prices can certainly be rationalized as transitory, and traders in a bullish mindset can rationalize all sorts of inconvenient facts if they arise.

Even as the days get shorter in the Northern Hemisphere, many people see only sunshine for now.

This post first appeared on November 5 on the Traders’ Insight blog.

Photo Credit: Dennis Yang via Flickr Creative Commons


The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice.

To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Interactive Brokers LLC, its affiliates, or its employees.

Any trading symbols displayed are for illustrative purposes only and are not intended to portray recommendations.

In accordance with EU regulation: The statements in this document shall not be considered as an objective or independent explanation of the matters. Please note that this document (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and (b) is not subject to any prohibition on dealing ahead of the dissemination or publication of investment research.

The Standard and Poor’s 500, or simply the S&P 500, is a stock market index tracking the performance of 500 large companies listed on stock exchanges in the United States. Investors can’t invest directly in indexes.


Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading futures, please read the CFTC Risk Disclosure. A copy and additional information are available at ibkr.com.