The US had a “melt-up” today in the words of Mike O’Rourke of JonesTrading.
Here’s how he described today’s events in a note to clients.
The US equity market opened with a sense of giddiness and never looked back. The rising tide lifted all boats with all 10 sectors and 24 industry groups rallying. The early rally commenced on the economic news in Asia and then hopes of a peaceful outcome in Syria was a key driver of gains in the afternoon. The Russians seized upon what is being reported as misstep by Secretary of State Kerry by hypothetically stating that Syria should surrender its chemical weapons to International authorities. It is hard to believe that such a resolution is likely because this is hardly a “trust but verify” situation. Regardless, the markets reacted to the latest headlines. The equity market rallied, Crude sold off throughout the afternoon and the Dollar weakened. The one move that did not ratify this line of thinking was the bounce in Treasuries. That being said, bonds are very oversold, and they did settle off their best levels and probably have more room to digest the weaker than expected employment report. As a result of the strong equity rally, the first 5 days of September resulted in a 2.37% gain. In what is already a strong year, it was the best first 5 day performance of the year.
Following today’s action, Japan is surging.