The market took a well-deserved rest Thursday, as the S&P 500 traded in one of the tightest ranges of the year. After several days of frantic buying, stocks were mixed, but breadth was 4,300 gainers to 3,900 decliners.
The most notable action was in biotechnology. Most of the 10% + movers were in that sector, and the Biotech exchange-traded fund (BBH) jumped nearly 2%. The action was driven by a large takeover and speculation that other companies may be the target of acquirers.
Biotechnology was one of the sectors that led this bear market to the downside. Many names in the group topped out in February 2021, and bigger cap names plunged after hitting a top in September 2021. It has been a deep, ugly bear market for the group, but now there is some hope that it is a leading indicator to the upside.
The broad market was on hold on Thursday, and the question is whether this is just a healthy pause that will help set the stage for more upside or stalling action that will trigger profit taking.
The July employment report will be released in the morning, and it will be interesting to see how this is spun. If the report comes in hot, will that cause more inflation worries, or will it raise hope that a recession can be avoided? Will a weak employment report indicate that a recession is gaining traction, or will it be viewed as a sign that the Fed's battle against inflation is starting to work?
Given the recent market action, there is a good chance that the jobs news will be viewed as positive no matter what it might be. We'll find out in the morning.
Have a good evening. I'll see you tomorrow.