S&P 500 Stalls Near 7,000 as Jobs Surprise and CPI Looms

J.D.: Let's not delay things any further. The man you are here to see, the one and only Jay Woods, chief market strategist at Freedom Capital Markets. Thank you for being here as always.

Jay: Always great to be here on a Wednesday.

J.D.: You, me and Martha Stewart here bringing about a close.

Jay: Shout-out to Martha Stewart, looking phenomenal. And the great people of Scotts Miracle-Gro doing good things.

J.D.: Absolutely. About an hour ago or so, I listened to our friend Tom Lee. He called this a confusing macro environment for investors. How are you approaching the macro environment? Given the jobs report today, the CPI print on the horizon? There's a lot of stuff going on here,Jay.

Jay: Yeah, I think that's a very good assessment. Mr. Lee usually a little more optimistic. So hearing him say confusing is confusing. But the macro environment we got that jobs number. Uh, you know, the BLS has gone through some changes. A lot of people questioning the, you know, the significance of that jobs number. The revisions were a little unexpected. Uh, we got a great rally off of it, and then it faded. And what have we done? We've closed at less than one point down in the S&P 500. I don't think I've seen a day like that in quite some time. It doesn't really tell the story of what happened today. The big rally, the sell off. And now to close unchanged. That is confusing. The CPI comes out on Friday. That's inflationary. That's the data. I think the traders are going to chew on a little bit more. That's the data that really puts the market in a new direction. What that direction is. We'll see. 7000 seems to be that ceiling. And if you go back to the last six Fridays, the S&P 500 is closed right around 6930.

Uh, the activity to get us to that number a little crazy, but it's about rotation. Tech is still struggling. But those other sectors materials, industrials uh, they're doing extremely well.

J.D.: Yeah. You know we had a big conversation about the Bureau of Labor Statistics redoing the birth death model for businesses specifically. And this is a print that not a lot of people expected, not just to see unemployment ticked down, but 130,000. We also had the big downward revisions for 2024 to 2025. Had this been on your bingo card, that these would be the numbers we'd wake up to today? Especially because not for nothing. The White House kind of downplayed the expected numbers in yesterday's media cycle.

Jay: Well, we had two officials from the White House, Navarro and who was the other?

J.D.: Kevin Hassett.

Jay: Kevin Hassett. Thank you very much. Uh, they kind of gave us mixed signals as to what to expect. And usually when you hear someone from Washington, you're thinking, oh, they know something, maybe something's going to happen. It looks like the goalposts have changed a little bit when it comes to these numbers. Uh, right now, seeing that we're flat, it didn't affect things, but we have to watch this going forward. Exactly how they reported what the revisions are going to be. And that's why I think the CPI is going to be much better indication as to what's going on. So jobs number 4.3%. Unemployment ticked down a little bit. If the CPI comes in cooler, it's looking for 2.5% down from 2.7%. That is very good for the fed in their dual mandate. But what does that mean. We don't need to cut rates. And what does the president want us to do. Incoming Fed president Mr. Warsh, if he gets approved, which I believe he will. After a lot of drama, by the way. But he will get approved.

Will he be able to cut rates? I don't know, it's going to be very interesting to watch. Powell has two more meetings. I don't see why he would cut rates. We'll talk about that next week. But right now, um, we're still at or near all time highs with the cycle of rotation in play. That's not a bad thing.

J.D.: Can I get your take on what we've seen out of earnings this week? Correct me if I'm wrong. Was it 78 of the S&P 500 companies, including three Dow components reporting this week that includes Coca-Cola? Yes, I know you were tracking that in your newsletter. Sign up for Jay's newsletter, by the way to tell you this every week. What have you seen so far? Any big surprises?

Jay: Waiting on McDonald's after the bell today? I thought they were this morning. I don't know what happened there, but the surprises are this. Staples, we'll go to Coca-Cola. Had a nice run going into the earnings. Earnings were okay and it fell back. The earnings that are surprising are those technology names especially in software that have done very well. Um Palantir the prime example Microsoft solid quarter.

And what did they do. Microsoft got punished because of their CapEx spend. Palantir it rallied. But you look at it as a technician. The behavior the sentiment has changed. So they are selling these stocks and they're waiting for maybe another quarter's worth of data before we get their legs underneath them.

So the good earnings narrative isn't following through. Let's see if that happens when other sectors report. Let's look at retail in the coming weeks. We have Walmart next week. That one will be an interesting tell. That's another stock in the staples the number one staple that has rallied tremendously in earnings.

Can it follow through? I'd be surprised regardless of what they report.

J.D.: All right. The great Jay Wood is the chief market strategist at Freedom Capital Markets and a CNBC contributor, helping us kick off the broadcast here on taking stock my man. Thank you for being with us. It's always perfect. We're framed up because I do the interview. We got Jim Cramer's Eagles helmet right behind you. It just frames the shot so beautifully for you. I'm a diehard birds fan.

Jay: Well, football season is over and we're on the same team. The Olympics are in place. Oh let's go, let's go USA, USA, my man. Thank you for being here. We'll talk to you soon.