The opinions expressed below are my own and do not necessarily represent those of Visdom Investment Group, LLC.
The streak ends
US/Iran setbacks caused markets to react accordingly, and stocks finally fell. Reports of an Iranian drone hitting an airport in Kuwait along with US/Israel executive office acrimony stirred things up for investors. The war-is-worsening trades resulted. Crude climbed, yields climbed, the Dollar climbed. Precious metals, stocks, and Bitcoin fell. The moves weren’t huge but they all said the same thing directionally, that the US/Iran situation is going the wrong way.
The win streak for the S&P 500 is over. Now we look ahead to the next leg of market movement. Will it be up or down, how long will it last, and how far will it go?
Perhaps markets are waiting for the next significant fundamental catalyst, which would be May nonfarm payrolls data (+85k est vs +115k prior). That data releases at 8:30 AM ET on Friday. Markets assumed the US economy was healthy since last month. Investors will look to May nonfarm to reinforce that narrative. In the absence of new inflation data, the bulls will be looking for something close to estimates or slightly better. Bears are looking for either extreme.
US labor data hasn’t been very volatile lately so it seems that the bulls have the advantage on that front. But that’s a Friday item anyway.
As far as tomorrow goes, it’s probable that we go as the next batch of US/Iran headlines goes. That used to be the singular driver of market behavior and, come Thursday, it probably will be again. Considering how numb we’ve all become to both the disappointing and promising news concerning that topic, we may not move much. The direction of trades will probably be influenced by the nature of the news but I don’t expect significant magnitude.
If I’m right, it means things will be quiet.
See you tomorrow.
-Mike
Visdom Market Commentary
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