Priced in for dovish Fed
S&P 500 correction didn't reach far, and bonds were back with more strength early in the session. Also the sectoral rotation leaned to the risk taking side as cyclicals with value were much stronger than defensives, and tech didn't get the lion's share of attention. Note how well financials and discretionaries were doing – my recent picks when talking the overly pessimistic view of consumer spending.
Friday, this effect wasn't powerful enough to return S&P 500 to the opening values as tech gyrated too much. Big picture, that's what we can expect in stocks over the coming weeks, making for a traders' market as select sectors are more richly valued than others. Market breadth is though broadening beyond the Top 7 stocks, and that means a sizable downswing is unlikely when the guessing game of market's focus is whether Jul is the last hike or not.
Yesterday's PMIs don't change the picture much – manufacturing improved but is still in recessionary territory, and services came in weaker but still expansionary. Consumer confidence isn't likely to take a hit today, and Richmond manufacturing isn't to provide us with a stunning reversal stopping LEIs from declining. Thus, risk assets can look to Friday's decelerating core PCE data for an upswing – this and housing data before Friday, I talked amply in yesterday's video.
Relatively shallow correction in gold and silver is approaching its low point, miners are neutral already. Sunday's words still apply – gold held $1,960, and more backing and filling around this level is likely. Also, some selling pressure is still to play out before FOMC whatever it is preceded by.Crude oil again outdid expectations, but is now at tougher resistances spaced by approximately $2 apart - $78, $80 and $82.50. Oil stocks keep having an easier time rising now.
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