Chart: SPY 1-year daily

The market is in a clear uptrend, and any pullback is buyable now. Yesterday’s pullback was technical and warranted, as the market is a bit overbought. Today’s jobs report was telling, as hiring is slowing down. As we have been saying, it is our opinion that the Fed has pushed rates as high as they need to be to slow things down. At this point, being patient is prudent; it takes time for the rate increase to start having the effect the Fed would like. We feel the Fed will pause the rate increase, but the statements after the meeting could be telling: will they be hawkish or dovish?

The market has mostly been concentrated in FAANG and tech stocks, but late last week and early this week things have started to broaden out. This is a good sign that the market is at least trying to establish another bull market, if it hasn’t already done so.

Initial claims for unemployment insurance jumped 28,000 last week to 261,000, the highest level since October 2021, and well above the consensus of 236,000. It was the third consecutive weekly gain and the most since July 2021. While most of it could be penciled to seasonal adjustments (the unadjusted increase was a much smaller 10,535 to 219,391), it is nonetheless significant, as it moved the level of claims above the range of 220,000-250,000 where they have been since February. The four-week average of claims picked up by 7,500 to 237,250. The data is subject to revisions and could tell a different story in subsequent weeks, but where it stands now it suggests some pickup in layoffs and softening in labor demand.