Morning Minutes 10/03/2018

Morning Minutes

Strong ADP Payrolls Send Stocks Soaring, Energy Rally Impacts Transports

October 3, 2018
10:00 am EDT

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

It’s looking like another banner day for US stock markets. Taking the baton from gains across Europe this morning, and propelled upward by a very strong ADP Payrolls report (230K way above street 185K), the Dow Industrials have broken out to another new all-time high rising 125 points or 0.45%, with the S&P 500 and NASDAQ 100 close to highs of their own. The S&P/TSX Composite, meanwhile is steady on the open.

Commodity prices are also on the rise once again. The energy sector is being led higher today by Natural Gas which is up 0.9% and has cleared $3.20/mmbtu with the peak demand winter season approaching. WTI and Brent Crude are holding above $75.00/ bbl and $85.00/bbl respectively as reports swirl that Russia and Saudi Arabia are quietly increasing production but not enough to offset lost Iranian production due to sanctions.
Meanwhile, metals are also on the rise again with Silver up 0.6%, Copper up
0.4% and gold consolidating yesterday’s move back up above $1,200/oz.

Energy and mining stocks may continue to benefit from renewed interest based on rising commodity prices. Transportation stocks, on the other hand may struggle as higher fuel prices may cut into their profit margins. Because of this, the Dow Transports have started to turn downward and may not confirm the Dow Industrials new high, a potentially bearish technical signal that investors should monitor, particularly since the broader Russell 2000 has also been weakening in recent days.

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