Stocks Push to All-Time Highs Following NFP Miss, Gold Spikes

Dow Jones, S&P 500, Nasdaq 100 Price Outlook:

Stocks Push to All-Time Highs Following NFP Miss, Gold Spikes

The Dow Jones and S&P 500 jumped to record levels Friday as traders reassessed the monetary policy landscape following a rather significant miss on non-farm payroll data. While lower than expected employment data is typically bearish for equities and risk assets, price action suggests the market has moved into “bad news is good news” territory. In such an environment, underwhelming data can lead to equity price gains as traders come to expect looser monetary policy or further fiscal assistance.

Dow Jones Price Chart: 1 – Minute Time Frame (May 7, 2021)

To that end, Friday’s NFP report hints at a slower than expected recovery from covid which could lead to further stimulus or looser monetary policy for longer. Aside from the Dow Jones and S&P 500, the employment report also sparked volatility in US Treasury yields, the US Dollar and gold among other markets.

Gold Price Chart: 4 – Hour Time Frame (December 2020 – May 2021)

Initial price action and the subsequent fundamental takeaways could also impact the ongoing reflation trade as falling Treasury yields and a slower recovery could help backstop the technology stocks of the Nasdaq 100. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis.

–Written by Peter Hanks, Strategist for DailyFX.com

Contact and follow Peter on Twitter @PeterHanksFX