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Last week, we asserted that traders were fitting their market narrative to the outcome that it desired. Today, on a day when the bond market is closed and banks have chosen not to release earnings on a federal holiday (though one when stock markets are open), there are fewer than usual outside forces that could alter the market’s path.The motion, or inertia, could operate relatively unimpeded today.

The early action in futures presaged the morning rally. They were up only slightly when many of us awoke, then climbed steadily higher throughout the pre-market.Another leg followed just as the market opened, and that move has persisted throughout the session so far.This activity was literally a matter of US-based traders waking up and buying futures in anticipation of the usual morning rally, likely encouraged by the fact that there would be no pesky economic numbers and few major company earnings to upset the vibe.So, off we went today. 

Remember, our assertion about the market choosing the narrative that best suited its desired outcome came after the market chose to largely ignore unfavorable CPI data in favor of a rise in weekly jobless claims.Never mind that the jump probably resulted from temporary factors unlikely to influence the FOMC’s decision process.   Several economists echoed my colleague Jose Torres’ assertion that claims were higher “in part due to the Boeing and port labor strikes and Hurricane Helene.” Market assumptions for Fed Funds futures moved little, either on the ForecastEx or CME exchanges.The market vibes were generally fine, undoubtedly helped by an upgrade in Nvidia (NVDA), so Thursday’s selloff was quite modest. 

Friday’s trading showed the preponderance of “good vibes”.There was obvious disappointment in Tesla’s (TSLA) robotaxi announcement, causing that stock to sell off by nearly 9%.The perceived lack of immediate competition for UBER and LYFT should have been interpreted as good news for those companies.But was it perhaps a bit over-exuberant for those stocks to rally by 10% on Friday? 

It was also enlightening to see how markets reacted to earnings from JPMorgan (JPM) and Wells Fargo (WFC).The former stock opened modestly higher than shot up about 4% almost immediately, while the latter traded down 3% in the pre-market only to close 5.6% higher (it continues to rally nearly 4% today).Both offered sufficiently positive guidance, with JPM upping theirs despite offering caution about the pace of net interest income, and WFC holding out the likelihood that its deposit cap might be lifted in the near future.It’s not as though either stock had been undervalued – both were flirting with all-time highs already (JPM achieved it on Friday, WFC hit one today) – but it’s exactly what the market wanted to hear. 

This earnings season will be all about guidance. Investors are broadly pricing in about 4% growth in quarterly earnings for the coming weeks and roughly 15% growth for 2025. It is of course difficult to reconcile double-digit earnings growth expectations with fears of an economy soggy enough to require significant rate cuts, but if companies can reaffirm their guidance, then it is reasonable for investors to take them at their words.

We’ll see if the rally persists throughout the day. The old adage “don’t short a dull tape” rings loudly on a day like today.It doesn’t guarantee a higher close, but considering the lack of news, and the tendency of the market to punctuate a day of gains with a rally during the last 20 minutes of the session, it seems as though this market will indeed stay in motion until acted upon by an outside force.

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