In this week’s recap: Mixed market results as labor numbers cope with uncertainty.
Weekly Economic Update
Presented by Paul Moffat, MBA, AIF®, May 10, 2021
THE WEEK ON WALL STREET
Stocks closed mixed last week as signs of continued economic recovery and upbeat earnings helped some sectors while the struggles persisted for high-growth companies.
The Dow Jones Industrial Average gained 2.67%, while the Standard & Poor’s 500 rose 1.23%. But the Nasdaq Composite index, home for many high-growth companies, lost 1.51%. The MSCI EAFE index, which tracks developed overseas stock markets, advanced 1.20%.1,2,3
Energy, financials, materials, and industrials led the market higher on more upbeat news regarding the economic recovery.
But technology and other high-valuation companies didn’t participate in the rally, weighed down by Treasury Secretary Janet Yellen’s comments that interest rates may need to rise. Despite a decline in long bond yields, high growth stocks were under selling pressure for most of the week.4
On Friday, a miss on April employment numbers seemed to dial back fears that the Fed might have to adjust interest rates. Stocks rallied on the news, especially some of the hard hit high-valuation companies.5
LABOR MARKET PUZZLE
The labor market appears to be gaining momentum ahead of a fuller summer reopening. The Automated Data Processing National Employment Report showed that private payrolls rose by 742,000 jobs (the largest gain since September 2020), while new jobless claims fell to under 500,000, sending its four-week average to the lowest point since the pandemic began.6,7
With expectations set very high, the April employment report (266,000 new jobs) came in well short of the consensus estimate of one million new jobs. Businesses have complained about difficulties in hiring workers, with individuals delaying their return to the workforce due to health concerns and ongoing school closings.5
T I P O F T H E W E E K
When you get a minute, make a photocopy of all the material in your wallet. If you lose it, you'll have a photocopy of the contents rather than relying on your memory.
THE WEEK AHEAD: KEY ECONOMIC DATA
Tuesday: Job Openings and Labor Turnover Survey (JOLTS).
Wednesday: Consumer Price Index (CPI).
Thursday: Jobless Claims.
Friday: Industrial Production. Consumer Sentiment.
Source: Econoday, May 7, 2021
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
THE WEEK AHEAD: COMPANIES REPORTING EARNINGS
Monday: Duke Energy (DUK), Simon Property (SPG), Air Products and Chemicals, Inc. (APD), Marriott International (MAR).
Tuesday: Electronic Arts (EA), Palantir Technologies, Inc. (PLTR).
Wednesday: Coupang, Inc. (CPNG).
Thursday: The Walt Disney Company (DIS).
Source: Zacks, May 7, 2021
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
Q U O T E O F T H E W E E K
“The most difficult thing is the decision to act, the rest is merely tenacity.”
T H E W E E K L Y R I D D L E
I'm tall when I'm young and short when I'm old. What am I?
LAST WEEK’S RIDDLE: Forward I am heavy, but backward I am not. What am I?
ANSWER: The word “ton” backward is the word “not.”
Paul Moffat, MBA, AIF® may be reached at 702.309.9970 or firstname.lastname@example.org
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Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
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1. The Wall Street Journal, May 7, 2021
2. The Wall Street Journal, May 7, 2021
3. The Wall Street Journal, May 7, 2021
4. FoxBusiness.com, May 4, 2021
5. CNBC, May 7, 2021
6. Reuters, May 5, 2021
7. The Wall Street Journal, May 6, 2021