The most-hated Bull Market Rally

• Apple unveils first large-screen Macbook, faster chip
• ISM Services Index confirms slowdown is coming
• S&P 500 testing bull market territory from October lows

US stocks are rallying as Apple eyes a record high ahead of the Cupertino developers’ conference. Apple’s WWDC is expected to unveil a mixed-reality headset, fresh Macs and macOS 14, iOS 17 and iPadOS 17, and watchOS 10. ​ This is a heavily anticipated event, so a successful one could help keep the stock market party going. ​ ​

Traders continue to remain optimistic with equities as recession calls get pushed to 2024.  It seems whatever major risk is thrown Wall Street’s way, investors have a ‘what, me worry’ approach as the Fed will likely come to the rescue. The stock market refused to break despite debt ceiling angst, regional banking fears, an earnings recession, and sticky inflation. It seems traders mostly believe that if we don’t get rate cuts this year, they will probably be larger next year.

Can you still call this a bear market rally as we test bull market territory? The tightening of credit conditions will ultimately damage the economy, but until it does, the bears might have trouble convincing Wall Street. This has been one long short-squeeze that has been very painful for many investors and frustrating for traders who were waiting for a dip.

ISM Services

The service sector is finally showing signs of weakness.  The headline ISM services index fell to 50.3, worse-than-expected and the lowest levels since May 2020.   The employment report highlighted robust service sector employment, while today’s ISM reading showed a drop into contraction territory.  Prices paid dropped from 59.6 to 56.2, the lowest levels since May 2020.

Resilience remains in the service sector, but weakness is emerging and that should be more noticeable in the coming months.

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