Stocks Week Ahead: Can S&P 500 Maintain Uptrend After Hitting Resistance at 4,320?

investing.com:

Mechanical aspects of the market took over on Friday after the surprise job report. The job growth was nearly double what was expected, while unemployment and wage growth were basically within the same range they had been for months.

So, if there is progress in the labor market softening, it is tough to find, and the pace at which wage growth is coming down is way too slow to meet the Fed’s 2% inflation target anytime soon. The Fed needs wage growth closer to 3%, which is still over 4%. And while this job data alone isn’t likely enough to raise rates in November, it just pushes out the timeline for rates to stay higher.

The changes in the path of monetary policy will not be found when looking for future rate hikes but will be found when the market is looking for rate cuts, and that changed on Friday. The call before the job report saw the first full rate cut coming in June, and that is now seen coming in July.

The results of the job report sent rates soaring and could have provided a preview of what is to come in the weeks ahead, with the ten and 30-year rates surging to almost 4.9% and 5.05%, respectively. It was the initial surge in rates that sent equity futures plunging, and it was the profit-taking in rates that followed that helped push stock prices higher, coupled with an implied volatility crush too.

The price of the 10-year futures contract after the data release traded sharply lower, and the S&P 500 Futures traded down as 10-year rates surged. As treasury prices rebounded, probably as profit taking took place from those short futures, it helped to lift the equity market along with it because, if anything, it seems that the equity market is more positively correlated to the bond market over the past 2-years more