Stocks Poised For Another Weekly Gain

Stocks were modestly higher for much of the day yesterday, but ended mixed by day's end. The tech-heavy Nasdaq and the small-cap Russell 2000 Index were up, while the Dow and the S&P were down.

But I was actually happy to see it. There was a common gap left on the charts for both the Dow and the S&P after Tuesday's gap higher open. (Common gaps are typically filled in. And technicians watch those gaps as areas of retracement, preferring to buy once those gaps are filled.) But yesterday's pullback, as small as it was, filled that gap in, and now it's free to move higher.

Not much in the way of new news yesterday. But a delegation from Mexico was in DC and sounded optimistic on a new NAFTA deal being announced shortly. Could even come as early as today. Either way, once it's agreed upon, it will be presented to Canada. A new NAFTA deal would likely be cheered by the market.

That would mean real trade talk progress with not only the US and the EU, after they announced an agreement on a framework for talks a couple of weeks ago, but now an agreement with Mexico and Canada too (if/when it happens).

China will be the hardest lift. But the tone and cooperation with the aforementioned partners does bode well for what we may see with China. Stay tuned.

In other news, Weekly Jobless Claims came in better than expected shedding -5,000 new claims to 213K.

And the Producer Price Index-Final Demand report showed prices were flat m/m. Excluding food & energy, however, it was up 0.1% vs. estimates for 0.3%. On a y/y basis, prices were up 2.7%, which was a slight dip from last month's 2.8% pace. All in all, it shows a moderate pace of inflation. Not too slow and not too fast. This suggests the Fed will keep to its indicated pace without worry of acceleration.

Once again, more good news on the economic front.

Expecting more gains to come for the economy and the market.

Best,

Kevin Matras

Executive Vice President, Zacks Investment Research

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