The Next Stock Rally Starts on March 10th?

Stocks rallied modestly today, lifted by Apple (NASDAQ: AAPL) and other tech shares ahead of a big week of economic data releases. The Dow, S&P, and Nasdaq Composite all gained while yields held firm. The 10-year Treasury yield remained below 4%, providing support to rate-sensitive stocks.

And though most tech stocks rallied this morning, Apple was without a doubt the market leader. AAPL shares surged 3% higher today in response to a “Buy” rating from Goldman Sachs issued over the weekend.

“We are Buy rated on AAPL as we believe the market’s focus on slower product revenue growth masks the strength of the Apple ecosystem and associated revenue durability and visibility,” wrote Goldman analysts in a Sunday note.

Apple single-handedly commands roughly 7% of the S&P’s total market cap. When Apple rises, the S&P usually does, too.

And the AAPL surge came at a good time considering that the S&P narrowly avoided a breakout below several key technical levels. The index touched its 200-day moving average – a widely watched moving average by analysts – last Thursday and threatened to break out below it prior to a major Thursday/Friday rally.

“I think we’re basically seeing a little bit of a carry-through momentum that that level held,” explained Keith Lerner, co-CIO at Truist.

“What you’re seeing more broadly, is just a little bit of follow through from last week’s rally, and you’re seeing the rally being led by the growth areas which are more sensitive to interest rates right now.”

But investors could be in for some turbulence this week as the market awaits several potentially sentiment-tilting events. Tomorrow, Fed Chairman Jerome Powell will deliver testimony to the Senate Banking Committee before coming before the House Financial Services Committee on Wednesday. Powell is unlikely to say anything that investors haven’t already heard by now, but the possibility for a shockingly dovish/hawkish statement remains.

What will be more important is the February jobs report, due out this Friday before the market opens at 8:30 am EST. ADP releases its own jobs estimate on Wednesday, which could impact stocks. Last month, ADP underestimated January’s jobs gain by roughly 400,000 jobs.

The data processing firm anticipates a February jobs gain of 210,000, which would be down significantly from the official jobs number (+517,000 payrolls) reported by the Bureau of Labor Statistics (BLS). The Job Openings and Labor Turnover Survey (JOLTS) for January also comes out this Wednesday.

Unlike the jobs report, which includes the prior month’s data, the JOLTS data lags by 2 months. A weak December JOLTS print on February 1st helped fuel a daily S&P rally.

ADP’s employment report comes out at 8:15 am EST, followed by the January JOLTS at 10:00 am EST. A wild morning session could easily result if ADP’s data opposes the JOLTS findings.

Until then, it’d be very surprising if stocks ran any higher from here. The S&P was set to chop sideways prior to Goldman’s AAPL “Buy” rating. Tomorrow won’t see any big market moves unless Powell says something truly stunning.

In general, the next week’s worth of data should show that the US economy has cooled significantly since January, where nearly every report was red-hot (inflation data included). A weak February jobs report would do wonders for bulls in that regard.

And so, despite the fact that stocks have risen mightily over the last few sessions, the market meltup could very well continue, likely on the heels of a signficant uptick in unemployment this coming Friday.


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