Will mixed jobs data drive stock prices higher?
Stock prices extended their upward march yesterday, with the S&P 500 closing 0.36% higher, retracing more of its recent pullback. Today, the index is expected to open 0.1% lower following the release of key monthly jobs data. The Nonfarm Payrolls number came in lower than expected at +143,000 month-over-month.
Investor sentiment has recently worsened, as shown by the Wednesday’s AAII Investor Sentiment Survey, which reported that 33.3% of individual investors are bullish, while 42.9% of them are bearish.
The S&P 500 index is once again approaching its record high from January 24, as we can see on the daily chart.
Nasdaq 100: Another Move Higher
The Nasdaq 100 gained 0.54% on Thursday, moving closer to the 21,800 level. Resistance remains around that level, marked by the late January trading range, while support is at 21,000-21,200, marked by recent lows.
Today, the Nasdaq 100 is expected to open 0.1% lower following AMZN earnings, jobs data. The AMZN stock is set to open around 3% lower.
VIX Continues to Decline
The VIX index, a measure of market volatility, advanced to the daily high of 22.51 last Monday, the highest level since December 20. However, it later retraced most of that move, falling to 14.90 on Friday. On Monday, it was briefly above 20.42 before pulling back, and yesterday, it dipped slightly below 15.
Historically, a dropping VIX indicates less fear in the market, and rising VIX accompanies stock market downturns. However, the lower the VIX, the higher the probability of the market’s downward reversal. Conversely, the higher the VIX, the higher the probability of the market’s upward reversal.
S&P 500 Futures Contract Fluctuates After Jobs Data
This morning, the S&P 500 futures contract is trading slightly below the 6,100 level, extending a short-term consolidation after rebounding from Monday’s low of 5,936. Potential resistance is around 6,150, marked by record highs, while support is at 6,060, marked by recent highs.
Conclusion
The S&P 500 is expected to open 0.1% lower after the monthly jobs data release. It may continue moving within a consolidation after this week’s advances. No confirmed negative signals have emerged, but the market continues to fluctuate following the post-election rally.
On Monday, in my Stock Price Forecast for January 2025, I noted “...recent rallies have provided selling opportunities. What will February bring? The earnings season is in full swing, likely adding to volatility. Political developments are increasing uncertainty. The market's ongoing consolidation since November may be forming a medium-term topping pattern ahead of some more meaningful downward correction. However, no confirmed bearish signals have appeared yet.”
For now, my short-term outlook is neutral.
Here’s the breakdown:
- The S&P 500 is nearing its late-January record high.
- The stock market is still seeing increased volatility following the post-election rally.
- In my opinion, the short-term outlook is neutral.
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Thank you.
Paul Rejczak,
Stock Trading Strategist