STRONG JOBS REPORT PUSHES FINANCIALS HIGHER -- BANKS AND BROKERS SURGE -- S&P 500 EXCEEDS JANUARY HIGH -- JUMP IN BOND YIELDS IS CAUSING PROFIT-TAKING IN REITS, UTILITIES, AND GOLD
FINANCIALS LEAD MARKET RALLY ... A strong jobs report is pushing stock prices higher today. Chart 1 shows the Financials Sector SPDR (XLF) jumping above initial resistance at its late January peak (near 24.00) and climbing back over its 50-day line. Banks and brokers are leading the XLF higher. Chart 2 shows the KBW Bank SPDR (KBE) surging more than 2% to reach the highest level in a month, and clearing moving average lines in the process. That's a good sign for them and the rest of the market. Bond yields are also jumping on the strong report as investors take some profits in bonds. The jump in bond yields is also causing profit-taking in rate-sensitive utilities and REITS. Gold is also seeing some profit-taking on the jump in yields and the dollar.
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Chart 1
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Chart 2
S&P 500 CLEARS JANUARY HIGH... Mid and small caps broke out to the upside yesterday. Today, large caps are doing the same. The hourly bars in Chart 3 show the S&P 500 Large Cap Index trading above its January highs (2064) for the first time since the start of the year. Assuming that upside breakouts lasts through the close, that would put large caps in sync with rising smaller stocks. The rise in stocks is causing profit-taking in bonds and rate-sensitive stocks.
