China Indicates Willingness to Negotiate, but a Difficult Technical Hurdle Lies Above
Conditions are ripe for a pullback, and the April jobs report is the first major economic data reflecting the impact tariff issues have had on the economy.
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Despite negative responses to earnings from Apple AAPL and Amazon AMZN, the indexes are trading higher early Friday morning as investors await the very important April jobs report.
The market was initially lower on the earnings news from the two Magnificent Seven MAGS members, but at 8.30 p.m. ET, Bloomberg reported that the China Ministry of Commerce issued a press release indicating it was considering trade negotiations with the U.S. The two countries have been dancing around pushing each other to make the first move, but this press release indicates that there is progress and that substantive talks may already be at an early stage.
In addition to the trade news, there are strong earnings reports that are helping, such as SAP SAP and Reddit RDDT. China stock, Alibaba BABA is gapping higher on the talk about trade deals and a shift to a local fulfillment model to avoid tariffs. Block XYZ and Atlassian TEAM are the biggest losers.
While trade and tariffs continue to be the main market drives, the jobs report Friday morning will be of particular interest because it is the first major economic report that will reflect what impact the tariff issues have had on the economy. The employment market has been showing signs of weakness for a while, and there is anecdotal evidence of layoffs and other shifts, but investors will be digging into the details of this report and extrapolating what may lie ahead.
The biggest concern for market players is technical conditions. The indexes have an eight-day winning streak, and the S&P 500 is back up by over its 50-day simple moving average. Some technical overhead has been overcome, but the mighty 200-day simple moving average lies above and will be a very difficult hurdle unless there is very strong and surprising news flow.
Conditions are ripe for a pullback, and a positive open on Friday may be an invitation to sell into strength. We'll have to see what happens on the jobs news first.
I'll be focused on managing positions and trying to keep accounts close to highs. I do not want to give back much of sizable, recent gains.
At the time of publication, Rev Shark had no positions in any securities mentioned.
