The benchmark index ($SPX) traded higher with a gain +1.08% (+45.2 points), recovering most of the week losses with a single Friday session as disappointing payroll report eased worries about Federal Reserve reducing its support anytime soon. $SPX is currently at all time high of 4,236 level.
$SPX daily price action have successfully broke out of its consolidation highlighted, with implied volatility remains stabilized from its low of 40 points/day that was highlighted last week.
The immediate support to watch for $SPX remains at 4,110 level, a minor classical support level turned trend channel support.
Inflation fears
Wednesday’s consumer price index figures for April get top billing on the U.S. economic calendar this week amid concerns among investors that rising price pressures could prompt the Fed to start scaling back monetary support measures sooner.
While inflation is on the rise, Fed policymakers have repeatedly said the increase is due to temporary factors.
The inflation numbers are coming in the wake of data on Friday showing U.S. job growth slowed sharply last month, with the economy adding just 266,000 jobs, far short of forecasts for 978,000. The unexpectedly weak data raised doubts over the expectations of some investors that the Fed could start tapering stimulus measures later this year.
Pipeline shutdown
Top U.S. fuel pipeline operator Colonial Pipeline has shut its entire network, without saying when it would reopen, after a cyber-attack involving ransomware on Friday.
Colonial is the main source of gasoline for the East Coast and also serves some of the largest U.S. airports. The incident has highlighted how vulnerable U.S. energy infrastructure is to hackers.
A prolonged outage of the network could trigger price increases at gasoline pumps ahead of peak summer driving season, a potential blow to U.S. consumers and the economy as pandemic restrictions are eased.
The outage could also potentially affect oil refineries on the Gulf Coast if refiners are forced to reduce crude processing because part of the distribution system is offline.
Stocks tug of war
While some tech stocks got a boost Friday in the wake of the disappointing jobs report, some portfolio managers say that blow-out earnings from several large tech companies over the last few weeks are not enough to keep making outsized bets on the sector.
Instead, those fund managers say that they are continuing to rotate into value and cyclical stocks – whose fortunes are closely tied to economic conditions – in anticipation that the economic recovery will be longer and more gradual than originally anticipated.
That trend looks set to continue and investors will also be looking at quarterly results from companies such as Disney ($DIS), Marriott ($MAR), Airbnb ($ABNB) and Tyson Foods ($:TSN), as a first-quarter earnings season which has been notable for far higher-than-expected profits winds down.
