Equity Markets on the Mix

The US market had a rough ride as market participants focused on Friday’s incoming August’s job report.
The market is generally well supported, giving that Uncle Powell had given assurance to the market on Friday that the Fed isn’t near anytime soon to raise rates despite tapering on the horizon. This had given support caps like Russell 2000 on Friday, which had risen sharply, paring some gains on Monday.

Technology stocks gave S&P 500 and Nasdaq a big lift. According to FactSet, only about 51% of the S&P 500 had risen, signally a narrowing breadth of strength. Nevertheless, the outperformance of the tech sector had lifted the index to a new high.

The Implication on Friday’s Job Report

Pika World sees the August payroll report on Friday as the key highlight for the week. It will allow investors to understand how some early termination of the unemployment benefits may drive workers back to work.

Unemployment benefits will end on Sept 6. Hence, the full report of labour health as a macro view can be observed when we reviewed the October data.

Although we want to see a healthy labour force, the swift recovery has negative implication to the stock market. Economists are generally looking for 750,000 jobs in August, and any upside surprise could fasten the pace of tapering and add pressure to the current rally.

SEC to consider Ban for Order Flow

Robinhood had a rough start for the week. This is after a controversial practice by brokers is expected to be terminated by the SEC that will dent the income streams of brokers.

The idea of payment for order flow is that brokers like Robinhood tend to send in trade orders to market makers who will execute those trades and receive a portion of the profits in return. Such a way of conducting business appear to have some level of conflict of interest.

First, market makers receive the share of profit from the trade, they also receive the data, and with the early information, they can match buyers and sellers out of the order flow, which may not provide an efficient market.

What’s on the Menu Today?

At 9.45 pm, we will receive the Chicago PMI data for Aug which is expected to fall to 68.0 from the prior period of 73.4.

At 10pm, the CB Consumer Confidence is expected to moderate to 124.0 from 129.1 level.

It is the last trading of the month, and we look forward to a good closing for August as it had been a marvelous ride.