Press Release Summary: Wall Street resumed its rally this week after new data showed the overall economy is holding up, but isn\'t so strong as to prevent the Federal Reserve from cutting interest rates says Betonmarket\'s Michael Wright. The Dow Jones industrial average saw an increase of nearly 200 points on Wednesday.
Press Release Body: Stocks turned around following two sessions of losses, after a report showed hiring in the U.S. private sector expanded at a faster pace in November. ADP Employer Services said 189,000 jobs were added during the month, an increase that bodes well for consumer spending.
Investors were also encouraged on Wednesday, after the department reported worker productivity advanced by an annual rate of 6.3 percent in the summer, the fastest pace in four years, while wage pressures eased.
Still, there is enough uncertainty in the economy to bolster the argument for lower rates. The financial sector is still struggling from months of credit problems, and the Institute for Supply Management reported on Wednesday, that service sector growth slowed in November.
Some investors are betting the Fed will go beyond the generally anticipated quarter percentage point cut, and lower rates by a half point. A mere quarter-point cut could bring some disappointment to Wall Street, but as long as the Fed reiterates an openness to lowering rates further in its accompanying economic assessment, the market could still move higher. The MPC led the way last week with a quarter point cut.
The market is currently pricing in a rate cut next week. Supporting the case for a cut is the fact that central banks globally seem to be open to the idea, a trend that would give the Fed even more room to move.
Investors also weighed a Commerce Department report that showed factory orders unexpectedly rose in October. However, that data was likely to be offset by the report from the Institute for Supply Management, showing growth in the service sector cooled somewhat in November.
All of this is positive news for both the SP500 and the US dollar, however it seems like the best value on trading is found in the longer term SP500 \'no touch\' options. These options compensate traders for correctly guessing a level, which isn\'t touched by the market during the duration of the trade.
After checking Betonmarkets.com the best value comes with a \'no touch\' on the SP500 for 25 days using a no touch level 130 points below the current price.
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