The market is now more vulnerable to bad news, says this strategist. Here’s what he says comes next

This article was originally published on this site

© robyn beck/Agence France-Presse/Getty Images


Load Error

First, the good news. When the S&P 500 has jumped more than 8% over a six-day period, market returns 12 months later were for a rise of 18%, with gains 88% of the time since World War II. Also good — when more than 60% of stocks make one-month highs, stocks rose an average of 13% over the next 12 months, with gains 92% of the time.

Both those milestones were reached on Monday, and now for the bad news — market returns over the next month were just 1% when the S&P 500 jumps more than 8% over a six-day period, and flat when more than 60% of S&P 500 constituents make one-month highs, according to Keith Lerner, chief market strategist at SunTrust Advisory Services, a unit of Truist Financial.

There was a host of mostly well-received earnings. Walt Disney Co. reported a smaller loss than forecast, and brought in more subscribers to its Disney+ streaming service than expected, though the entertainment giant did say it will skip its semiannual dividend payment scheduled for January. Cisco Systems reported a stronger profit than forecast, even as revenue slipped for a fourth straight quarter, with the network-equipment maker forecasting a better current quarter than analysts had expected.

Luxury-fashion platform Farfetch reported a smaller-than-forecast loss on higher-than-expected revenue. Palantir Technologies the data analytics company, raised its full-year revenue guidance.

Video: Why is stock market surging amid election uncertainty? (NBC News)

Why is stock market surging amid election uncertainty?
What to watch next

The latest data on producer prices and the University of Michigan’s consumer sentiment index are due for release, and New York Federal Reserve President John Williams is due to speak.

President Donald Trump signed an executive order prohibiting Americans from investing in Chinese companies that support that country’s military, including two that are listed on the New York Stock Exchange, China Mobile and China Telecommunications In a radio interview, U.S. Secretary of State Mike Pompeo stated Taiwan isn’t part of China. Hours later, China finally congratulated President-elect Joe Biden on winning the election.

Cloud-platform company Fastly rose in premarket trade after the Trump administration delayed enforcement of its ban on TikTok, which is a Fastly client.

The markets

U.S. stock futures pointed to a strong Friday the 13th, with gains for both the S&P 500 and Nasdaq-100 contracts. The dollar fell, and gold edged higher.

The yield on the 10-year Treasury which dropped 10 basis points on Thursday, edged up to 0.89%.

The chart

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

Continue Reading