Source: Zhitong Finance "Since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%)." With the rebound of the stock market, the old adage "Sell in May and Go Away" seems to have been a bad advice once again. Last month, the S&P 500 index rose 4.8%, the best May performance since 2009. The NASDAQ 100 index rose nearly 6.2%, and the NASDAQ Composite Index rose 6.9%. Goldman Sachs FICC & Equities Trading Division said: "History doesn't really support this saying. Don't sell, leave the market (go on vacation), and enjoy the good times." The rising trend is still to be continued? If history is any guide, it may indicate that the rise of the stock market is not over yet. Looking ahead to the rest of 2024, Scott Rubner, Managing Director of the Goldman Sachs Global Markets Division and tactical expert, pointed out the following historical background for investors. Rubner stated that the S&P 500 index has risen 10.7% year-to-date, and since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%). "Since 1950, the median return of the last 7 months of each year (June 1 to December 31) is 5.4%. In the aforementioned 21 cases, the average performance of the last 7 months increased to 8.1%." Rubner added. Rubner also pointed out that the NASDAQ index has risen for 16 consecutive Julys, with an average return of about 4.64%.
As of the week of August 3rd, the initial claims for unemployment benefits decreased by 0.017 million to 0.233 million, which is lower than the expected 0.24 million and the largest decrease in nearly a year.
According to data released by the US Department of Labor on Thursday, the initial claims for unemployment benefits decreased by 0.017 million to 0.233 million as of the week of August 3rd, which is lower than the expected 0.24 million and the largest decrease in nearly a year. This is due to a decrease in the number of applicants in states where there has been a significant increase in recent weeks, such as Michigan, Missouri, and Texas. As of the week of July 27th, continuing claims for unemployment benefits decreased slightly to 1.875 million, which is expected to be 1.87 million.
Although the number of initial and continuing claims for unemployment benefits has been trending upwards since the beginning of this year, it has remained around the levels of 2019. The drop in data released on Thursday may alleviate some concerns that the US labor market is cooling at a pace that is too rapid following the non-farm payroll report of the previous week that caused panic in the market.
The decrease in the number of initial jobless claims may help the market believe that the US labor market is only returning to the pre-pandemic trend rather than deteriorating rapidly. The non-farm payroll report released last week showed that employers significantly reduced their hiring scale in July, and the unemployment rate continued to rise for the fourth consecutive month, triggering a key recession indicator.
Concerns about the employment market situation intensified after the non-farm payroll report was released last Friday. The number of non-farm payrolls in July increased only by 0.114 million people, far lower than expected. At the same time, the unemployment rate rose to 4.3%, triggering the so-called "Sam rule", which judges economic recession by measuring changes in the unemployment rate.
Thomas Hayes, analyst at Great Hill Capital Llc, said, "Since the release of the US non-farm payroll report last Friday, everyone has been nervous about the economic recession caused by the Sam rule. The lower-than-expected number of initial jobless claims alleviated concerns about a complete collapse in the labor market. Our economy is quite strong, and there will not be an imminent recession, so we can wait a few more weeks for the Fed's first rate cut."
This led to a sell-off in global markets and prompted calls for an emergency interest rate cut by the Fed before its scheduled policy meeting in September – something economists deemed highly unlikely. Instead, some expected a 50 basis point cut in September, versus the more typical 25 basis points. The market expects the Fed to cut interest rates by at least a full percentage point by the end of the year.
Since the non-farm payroll report was released last Friday, Fed officials have repeatedly stated that they will not overreact to data for one month, but they admit that their job aspect of their dual mandate has received greater attention due to the easing of inflation. Fed Chairman Powell said ahead of the release of the employment report that the labor market was gradually recovering to pre-pandemic levels. Other data supports this view, as job openings remain high, layoffs are rare, but some well-known giants such as Dell Technologies and Intel have recently announced layoffs.
Marc Chandler, market strategist at Bannockburn Global Forex, said, "When it comes to the labor market, it is multidimensional, not just a single number. So I think that the number of initial jobless claims in the United States is one of the figures. Today's initial claims data is a bit lower than people expected, although the four-week moving average is still rising. The idea that the economy is about to decline seems unlikely."
The data for the number of initial jobless claims each week is easily affected by fluctuating factors, especially at this time of year, as data can sway due to the summer break during school or summer shutdowns at car factories. The less volatile four-week moving average of initial jobless claims in the United States rose slightly to 0.24 million, the highest level in a year.
Before seasonal adjustment, initial jobless claims fell by about 13,600 to 203,054, the lowest since May. After Hurricane Berel struck in early July, there was a surge in the number of applicants in Texas, which has since decreased, but the impact of Hurricane Debbie on the southeast may be reflected in next week's data.
After the report was released, US benchmark stock index futures and US treasury yields rose. US 2-year and 3-year Treasury yields rose 10 basis points that day, while the US 10-year Treasury yield rose back above 4%. S&P 500 index futures extended gains to 1%, Nasdaq 100 index futures rose 1.4%, and Dow Jones index futures rose 0.5%.
Wasif Latif, President and Chief Investment Officer of Sarmaya Partners in Princeton, New Jersey, said that the lower-than-expected initial claims should make the market happy. At least the bulls in the market should be happy, as this may be a sign of a soft landing. This is not a data point with a big impact. Data with big impact is the unemployment rate last week and next month.
Editor / jayden