Investing.com - U.S. stocks could be set to take off if the nonfarm payrolls report Friday is upbeat and there is a positive outcome to the summit between President Donald Trump and his Chinese counterpart Xi Jinping.
Nonfarm payrolls are usually inversely related to initial jobless claims but directly related to the ADP release. However, ADP nonfarm payrolls and initial weekly jobless claims for last month gave contradictory signals.
Wednesday, the ADP reported the U.S. economy created 263,000 jobs in March, a huge beat over the expected 187,000 estimated.
On the other hand, weekly initial jobless claims in March largely pointed to a rather less than upbeat official nonfarm payrolls report, which is estimated to show a fall in job creation to 180,000 from an initial reading of 235,000 in February.
During the campaign, Trump talked tough regarding China. He called them currency manipulators and threatened trade sanctions, tariffs and lawsuits.
But observers point to the fact that Trump also talked tough ahead of his meeting with Japanese Prime Minister Shinzo Abe only for the encounter to close on a strongly positive note.
A similarly favorable outcome with Xi could prompt upbeat tweets from Trump and would also be bullish for stocks.
Observers also downplayed the significance of the minutes of the latest FOMC meeting, which showed most members backed starting to trim the Federal Reserve’s balance sheet this year. This wasn’t news since New York Fed President William Dudley had already flagged this earlier.
Should a combination of strong numbers and a cordial finish to the Trump-Xi meeting occur, markets could easily push up to new record highs.