US stock markets (SPY) have opened strong on January 4. US stocks (AMZN) ended with sharp losses on January 3 after Apple’s (AAPL) lower guidance spooked investors. However, a slew of factors seems to support bulls today.
On January 4, China lowered its reserve requirements for banks by 100 basis points. China’s Commerce Ministry said that the US and China are scheduled to hold more talks on January 7–8. China’s slowdown and the US-China trade war are the two biggest risks for markets in 2019. With the reserve cut, China seems to signal that it’s ready to take more steps to address the slowdown. On the trade war front, some of President Trump’s recent tweets suggest that the talks seem to be heading in the right direction.
On January 4, the jobs report showed that the US added 312,000 jobs in December—higher than analysts’ expectation of 176,000 jobs. The November jobs data were lower than expected. Meanwhile, futures pared some of their gains after the jobs report due to the expectation that a strong jobs report could propel the Fed to raise rates faster.
Drawing an analogy from the November jobs report, markets opened higher after the jobs data were lower than expected. However, growth concerns took over and markets ended lower. Along with these macro factors, we have some company-specific news. Netflix (NFLX) and Intel (INTL) got an upgrade.
Bulls seem to be looking at sweet revenge today after the reversals on January 3. While 2019 looks like a bulls’ nightmare, the situation might not be as bleak. To learn more, read Why 2019 Could be a Crucial Year for Stock Markets.