U.S. stocks rose, extending a record for the Standard & Poor’s 500 Index. The S&P 500 gained 0.6% to 1,755.52 at 10:04 a.m. in New York. Payrolls climbed by 148,000 last month, less than the 180,000 projected by economists. The jobless rate fell to an almost five-year low. A separate report showed construction spending in the U.S. rose in August for a fifth consecutive month.
Equities: The DEC13 E-mini S&P 500 (CME:ESZ13) has rallied above and beyond the 1750 level this morning on a weaker than expected jobs report, which is likely fueling speculation that the Fed will not taper stimulus in 2013. This market hit a high of 1755 before going down to 1744. We believe if the market continues to rally, it will approach our next target of 1770. However, we are watching 1738 as our key pivot level above which the market needs to show strength in order for a rally to continue. The market loves the idea of continued Fed stimulus, and we are seeing that idea in action today. With all that said, we believe the market may be very close to overbought levels on the short term.
Bonds: The DEC13 U.S. 30-year bond futures (CBOT:ZBZ13) rallied over 1 point this morning, trading up to 134’27. This is not surprising considering the data which is causing bond bulls to get active again in consideration of a no-taper policy through the rest of 2013 which may be in effect. We would not be surprised to see the bonds continue to rally, and look at 136 as the next potential target. Now that the U.S. economic data will start to be released on a regular schedule again, we believe the numbers will be of great importance to the markets, such as the inflation and jobs readings. We believe the readings on inflation will be especially important.
Currencies: We are seeing big moves in the currency markets today. The DEC13 Euro/USD futures are up 100 ticks to 137.80. This market has been looking extremely strong, and today is no different. It looks like the trend of USD weakness and Euro strength may continue. Our next target higher for the Euro is 138.40. The DEC13 Swiss Franc/USD is also higher by 87 ticks today, trading up to 111.77. The DEC13 Aussie/USD is up 41 ticks to 96.63, after coming very close to hitting 97. We believe the rally in the Aussie may slow from here and this pair may consolidate.
Commodities: Gold is exploding higher again today, with the DEC13 contract (COMEX:GCZ13) trading up $25 to $1,340. We believe gold may continue to move higher on thoughts of a no-taper policy extending into early 2014, maybe longer. DEC13 corn continues its bearish trend today, trading down $.05 to $4.38. We would not be surprised to see corn approach the $4 level, with $4.25 as the potential first target. DEC13 cocoa futures (NYBOT:CCZ13) are right back at 2013 highs, trading up $37 to $2,767. We still believe cocoa is approaching overbought levels and may consolidate from here. NOV13 WTI crude oil (NYMEX:CLX13) is down $.75 to $98.47, a far cry from the end of summer rally which took this market above $110. We believe oil is declining on abundant supply ideas coupled with a diminishment of the middle east fear premium which was so present just a few months ago.