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Is it time for Wall Street to unveil the 27,000 Dow hats that were summarily withdrawn in October, as the stock market rallied out of steam?
It's hard to say, but the Dow Jones Industrial Average
DJIA, + 0.64%
Nevertheless, he is not only about to break a new psychological milestone, but also his first record in six months.
Thursday, the Dow remained within 2% (about 1.7%) of the record close of 26 828.39 recorded October 3. This historic record has given way to a global equity defeat largely blamed on a combination of worries about the pace of Federal Reserve rate hikes and the unresolved tariff dispute with China.
However, these two fears, which threatened to disrupt a stock market rally that has lasted for a decade as a historically reliable recession indicator in the US Treasury market last week, have turned red bright, have faded.
Read: Here are three times the Fed has denied the warnings of the yield curve regarding the recession and was wrong
Read also: The yield curve is reversed – here are 5 things investors need to know
What happened?
At the end of January, the Fed announced that it would pause rate hikes as it adopted a wait-and-see approach. In March, he maintained a conciliatory tone and said he would end his balance sheet earlier than expected. Movements have eased worries about the tightening of the financial situation even as concerns remain over the slowdown in the global economy.
In addition, the world 's two largest economies are slowly moving toward the resolution of a tariff dispute that has been on the market for almost a year.
In the absence of these hurdles, including Fed rate hikes, there are few barriers to market growth, bullish market participants said. Even if corporate profits should not support further progress and the slowdown that forced the European Central Bank to reduce its forecast for 2019 gross domestic product in the euro area from 1.7% to 1.1% – and to introduce new stimulus – begins to hit the United States (the Fed has also lowered its US GDP forecast for this year, from 2.3% to 2.1%).
Lily: Why the ECB's surprise measures have thrilled the global stock markets
Highlighting the economic crisis, a recent report on the service sector, the ISM non-manufacturing index, rose from 59.7 in February to 56.1 last month. Retailers and technology developers grew in March at the slowest pace in 19 months. A reading of at least 50 indicates an expansion of the activity. An ADP report released Wednesday on the private sector workforce showed that hiring had dropped to its lowest level in 18 months.
Lily: How can stock speculators be caught off guard by another report about ugly jobs?
Boris Schlossberg, managing director of the G-10 foreign exchange strategy at BK Asset Management, said he believes that currently, the markets are benefiting from an "easy monetary policy" scenario in the world, which could push stocks up, even if the fundamentals justify it.
"I think it's Goldilocks' scenario and the markets are very happy with easy monetary policy," he told MarketWatch. "That's why we're up for now," he said.
That said, the market has yet to confirm that recent weakness is not more sustainable.
Friday's jobs could be key to this next catalyst, as well as a trade deal with China, Schlossberg said.
"Economic growth in the US economy is a false assumption," he said.
See: Do you expect a surprise from non-agricultural employment? Traders focus on these 2 currencies
The US economy would probably have created 179,000 new jobs last month, according to economists surveyed by MarketWatch. If this figure, or a lower or higher level, comes true, worries would be greater if hiring in February has slowed to 20,000, the smallest gain in 17 months.
Lily: Job creation rebounded in March after the February freeze
Meanwhile, beyond the Dow, the S & P 500 index
SPX, + 0.21%
is about 1.8% lower than its September 20 peak and the Nasdaq Composite Index
COMP -0.05%
which fell into a bear market at its lowest since its peak of August 29, is about 2.7% of its record.
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