On Monday, the S&P 500 index futures reached a new all-time high at 4808.25. The previous day it posted its all-time closing high at 4686. However, if one follows the market on a closing basis, the outlook is not so rosy. In fact, the index has been lower in six of the last seven sessions and posted its lowest close since December 22.
Adding to the market malaise, was a jobs number, that despite lower overall employment rate, the jobs added were disappointing at best. In other words, could the Fed be embarking on interest rate hikes when the economy is actually slowing instead of heating up for a rapid ramp-up for inflation?
What is more concerning is the reaction to the jobs number. While the futures chopped around and attempted to rally, there was not the corresponding bid in stocks that is often the case when the futures move higher. It was almost as if no one was rushing to buy and was waiting for a rally to sell.
The seesaw price action in the index intraday exemplified the lack of a strong bid underneath current levels. While the index staged a major rally off the intraday low of 4653.75, it rebounded to Thursday’s closing price (4687.50) and that was it.
In the final hour, the big money gave up on selling on strength and sold into weakness. This was evidenced by the index shedding 19.75 handles in the final hour. For the session, the index declined by 19 handles to close at 4667.75.
The stampede into value stocks was evidenced by Berkshire Hathaway “B” (NYSE: BRK.B) being the biggest gainer of the top components. The issue made a new all-time high and all-time closing high every day this week. On Friday, it added $6.66 to 2.13% to close at $319.78.
That was in stark contrast to the cash index which declined by 0.41%.
Will Tesla Inc (NASDAQ: TSLA) be the next overvalued stock to get annihilated? The issue gave back all of Monday’s ill-gotten gains and closed lower for the week. For the session, the issue declined by $37.74 or 3.5% to close at $1026.96.