Information Technology (XLK) and Communication Services (XLC) names led another monster session yesterday. The decline in Real Estate (XLRE) and Financials (XLF) was tied to persistent concern over Commercial Real Estate (CRE) bankruptcies after Jerome Powell alerted everyone that more banks would succumb to CRE failures.

Thus far in March, there are stealth rallies in Materials (XLB), Energy (XLE), Consumer Staples (XLP), and Health Care (XLV). The biggest advance has been in Utilities (XLU) - a sign of growth anxiety among deep-pocketed investors.

Too Big?

There is a lot of anxiety over the dominance of a handful of names in this rally.

The ten largest companies now account for 33% of the S&P 500’s total market capitalization but only 23% of its total earnings.

I suspect the numbers would be even more egregious if we just looked at the top two movers (NVDA and META).

In many ways, this is vastly different from 2000, including the price-to-earnings (P/E) ratio of the top ten names back then and now.

Today’s top ten are trading below the 2020 level.

 

 

Heat Map

There was some red in Financials and drug companies, but for the most part, tons of green.

Market Breadth

Yesterday's session was extremely bullish across all metrics.

The new highs to lows were very impressive and continue to signal the bias is firmly to the upside. And that is a buy signal.

Market Breadth	NYSE	NASDAQ
Advancers	2,005	2,590
Decliners	804	1,670
New Highs	296	334
New Lows	20	90
Up Volume	2.77 billion	3.29 billion
Down Volume	1.29 billion	1.74 billion

Today’s Jobs Report

The Street is looking for 190,000 to 200,000 jobs, but the whisper number suggests the print will be higher this morning.

This report has become a farce, but it still moves markets.

Watch for a big pullback on the increase in wages, which means the work week has to reverse its long decline.

Today’s Session

As I’ve talked and written about over the past year, the government jobs report continues to lack credibility assigned to it because of the changes.  Monster revisions for January makes me look sideways at the 275,000 posted for February (I would bet a fortune on a sharply lower revision next month).

Markets were focused on the unemployment rate.  The consensus range was 3.6 to 3.7%, but the print saw 3.9%, which gets closer to 4.0%, which is probably the magic number in Powell’s mind to take a victory lap.

The street isn’t waiting, as the soft-landing camp got more ammo – stocks up, bond yields down.

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