For the second day in a row the indices sold off sharply following a strong open. Once again, though, the bears were unable to close the deal. The indices came back even stronger Thursday and surpassed the early highs.
The initial gap-up open was caused by better-than-expected March retail sales of 1.6% versus estimates of around 0.7%. This helped to push the Atlanta Fed GDP growth estimate to 3% from 2.8% for the first quarter or the year.
The bear's narrative that growth is slowing may still be valid, but with a friendly Fed, a tight labor market and data like these retail sales the chances for upside surprises are good.
The Mueller Report sucked up most of the news coverage, although it was mostly a positive for the market. Impeachment or serious charges against President Trump would create uncertainty and hurt the focus on positive economic growth and that is really the only thing the market cares about. The political debate is not going to end any time soon, but it will not have much of an impact on the market.
The healthcare debate did have some impact on the market this week. It caused some very painful pockets of weakness in medical and biotechnology stocks. Although there is little chance that "Medicare for All" will happen it was a catalyst for negative momentum in the sector and many market players sold and took stops rather than risk further losses. While many of these stocks bounced late in the day some severe technical damage was done.
It was a choppy week and a tough one for many traders to navigate. However, the bears still can't seem to gain any traction. They had a couple chances when gap-up opens were sold, but it is the close that counts and those continue to be quite good.
Have a great holiday weekend. I'll see you on Monday.