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Stocks Settle Higher Ahead of Yellen Testimony

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Stocks Settle Higher Ahead of Yellen Testimony

Stocks started the Monday trading session on the defensive on the heels of a snap back rally that investors experienced at the end of the prior week. Friday’s payroll report reflected a negative headline number but the unemployment rate was stronger than expected, and when combined with an increase in the participation rate, showed a stronger than expected increase in the number of people working. Mid-day stocks moved into the black ahead of Tuesday testimony by new Fed Chair Janet Yellen.

Meanwhile, the proportion of workers who voluntarily left their jobs, known as the quit rate rose to a post-recession high of 1.8% in November. That compares with a low of 1.2% in September 2009 but is well under the average of 2.1% from 2000-2006. Some economists view the quit rate as an indicator of the state of the labor market. A higher quit rate shows increasing confidence that there are other jobs that are available and therefore an improving jobs market.

The 10-year yield has backed up to 2.7% nearly 10 basis points from the start of last week. Yields had moved lower after the release of the ISM manufacturing report, which showed a weaker than expected expansion printing at 51 compared to the 56 expected by economists. Rates started moving higher after last weeks released of ISM Services which showed that weather did not affect the service industry.

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The S&P 500 index edged higher on stronger momentum. The MACD is poised to generate a buy signal as the spread is poised to cross above the 9-day moving average of the spread. The RSI moved higher with price action reflecting accelerating momentum while printing near 50 which is the middle of the neutral range.

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