The bad news is good news for the stock market, which desperately wants Jay Powell & Co to reignite the money printing press.

In addition to a big miss on monthly payroll data, ISM Services snapped 15 months of expansion careening into contraction for the first time since December 2022.

Higher borrowing costs from rates and sharply higher prices have had a significant impact on business conditions. Prices have been moving higher for 83 months and are now increasing even faster.

While the stock market is cheering the news, it’s the bond investors that are breathing a greater sigh of relief. Interest rates retreated on the economic data, specifically the weak jobs data, with the 10-year dipping below 4.5%.  Powell stated at the last FOMC meeting that they are “prepared to respond to an unexpected weakening in the labor market. 

And now a December rate cut is back in CME FedWatch Tool, which means two cuts. 

That’s one hundred percent more than consensus before the jobs report.

The bulls are in control with the major indices are all firmly in the green with the Nasdaq up 1.9%, and the Dow and S&P 500 both gaining about 1.2%.

The S&P is trying to get through the 50-day after holding key support.  Love the RSI (relative strength index) and ROC (rate of change) here.

 Information services are a clear leader today and the only S&P 500 sector in the red is Energy.

Breadth is decidedly positive and new highs outweigh new lows, a sign we like to see.