Resilient Labor Market Adds More Jobs in January, and December Gets an Upward Revision; Market Adjusts Interest Rate Expectations and ES and NQ Reach Record Highs
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Good afternoon, traders. It’s Chris Chavez with the Blue Line Futures and it’s your daily midday market minute. The S&P trades to new all time highs, the NASDAQ tests all time highs. But before we get to it, if you’re watching this video like it, subscribe if you’re on our website, there’s also a link to direct you to YouTube. You could subscribe that way.
We would love for you to follow us. We would love for you to help us build our following. Yeah. So we just finished out some big tech earnings. Mega caps reported. We got met up. Google earlier this week. Amazon yesterday, Apple as well. And we saw a huge beat, especially for Meta and Amazon. Really lifting the Nasdaq 100 and sending the S&P to new all time highs.
And we’re approaching the psychologically significant 5000 level for the S&P, which is a big deal. Now, we got a tremendous amount of jobs data this morning. The unemployment rate came in better than expectations at 3.7% versus 3.8%. And the big surprise, nonfarm payrolls was expected to come in at 187,000. We got a print of 354,000 jobs. That is a huge beat.
We also got an upward revision of 333,000 jobs revised higher from 216,000 jobs for the month of December. So you saw a noticeable gain in education and health services, professional and business services, trade, transportation and utilities and manufacturing. So that definitely supports the manufacturing sector. We’ve seen other indicators like ISM also start to look a bit better too, and definitely looks like manufacturing is starting to pick up, finally seeing some positive job gains in that sector.
So we saw a large beat there. Looking at wage inflation, average hourly earnings also came in at 4.5% year over year versus 4.1% expected. That’s a 6/10 increase for the month of January versus a 3/10 increase that was expected. So just a lot of economic data that further supports just how strong this labor market is. And we’re seeing the ten year yield now above 400 basis points once again up nearly 20 basis points on the session.
Looking at interest rate cuts, what does the landscape look like now as we’ve got some of this data? Well, there is 108 basis points, 110 basis points worth of cuts priced in for this year. Further, you know, expectations have now shrunk really further cut, expectations have shrunk and you’re starting to see those expectations converge. More with the Fed’s summary of economic projections, where the median estimates call for 75 basis points worth of cuts.
So the markets are now pricing in about one more cut than what the Fed’s expecting or what they projected for this year. And you’ve seen one interest rate cut taken off the table. We’re now down to 425 basis for 25 basis point cuts for this year. And we got some Michigan data as well. Consumer sentiment at an elevated level came in above estimates.
One year. Inflation expectations came in at expectations. And again, you know, consumers are just continuing to feel strong. Growth is looking really strong. Corporate earnings surprise to the upside. And really what is the narrative today, especially for the S&P and the Nasdaq really outperforming earnings matter and growth matters if you’re continuing to see better than expected earnings despite higher yields.
The Nasdaq, the Mega-Cap stocks, you know, the big constituents inside of these broad indices are going to continue to outperform. And you’re seeing that today with the Russell in negative territory and yields are sharply higher and the S&P hitting new all time highs. So want us to highlight some of these support and resistance levels really for the S&P?
Is that 5000 significantly psychologically significant resistance level? That’s going to be 49, 81 to 5000 breaking close above there. I mean, it’s off to the races, right? So that the Nasdaq, it’s going to be the previous highs, which is 1779 for and crude oil kind of in negative territory here today. Yields really putting pressure on crude, which you would think with better than expected economic data, crude prices may be higher.
So it’s going to be an interesting one to watch. Three star support, 7248 to 72, 56. Silver also in negative territory, gold as well. Flight to safety, trade really just getting taken off the table. So three star support level for silver 20 to 46. If you have any questions, reach out to our trade desk. We’re here for you.
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