The Dow Jones Industrial Average finished up 181.92 points yesterday (+.75%), the S&P 500 up 23.39 points (+.86%) and the NASDAQ was up 83.75 points (+1.12%). Even the Russell 2000, which has lagged behind the big 3 when the dollar is lower as it was today, rallied 19.06 points (+1.15%). By the time this is published, non-farm payrolls will have been released. The market seems to be banking on a goldilocks payrolls number and a “blink” on somebody’s part in the trade war, which officially began at midnight but that will not be the end of the story. As of Thursday night, President Trump and his team were not blinking. Referencing what would happen after the initial $34 billion that was scheduled to go into effect last night, the President went on to outline the remaining plan that is at the ready. “ Speaking to reporters on Air Force One, he said, “Then you have another 16 [billion] in two weeks and then as you know we have 200 billion in abeyance and then after the 200 billion we have 300 billion in abeyance. OK? So we have 50 plus 200 plus almost 300. It’s only on China.”
It seems the market has priced in the $34 billion and maybe even the additional $16 billion, but not the rest, hoping for a resolution or no retaliation out of China. Stocks are also banking on a “just-right” payrolls number which would support the current strong assumptions for U.S. GDP, most of which are around 4% or higher. Given that, the weekend may be more critical than the move on Friday. Take this Friday for what it’s worth and look for confirmation of the move on Monday and you may be able to pick the direction for the month of July in the Dow, S&P and the NASDAQ.