After a monthly report showed that employment was higher than predicted as the economy recovers from the COVID outbreak, U.S. equities climbed for the second week in a row to close Friday, with all three benchmark indices reaching new all-time highs before heading into a long holiday weekend. Investors were watching the jobs numbers because, despite a record number of job postings, the labor market recovery has been patchy in the aftermath of the devastating outbreak.
The bond market in the United States closed an hour early on Friday, and markets in the United States will be closed on Monday in commemoration of Independence Day, which comes on a Sunday this year. What happened to the benchmarks?
The Dow Jones Industrial Average DJIA, +0.44 percent increased 152.82 points, or 0.4 percent, to 34,786.35, setting a new high for the first time since May 7th.
The S&P 500 index SPX, +0.75 percent rose 32.40 points, or 0.8 percent, to 4352.34, a new all-time high and its 7th straight record high, the longest winning streak since 1997.
The Nasdaq Composite Index COMP, +0.81 percent rose 116.95 points, or 0.8 percent, to 14,639.33, a new high.
The S&P 500 gained 22.44 points, or 0.5 percent, to close at 4,319.94 on Thursday; the Dow gained 131.02 points, or 0.4 percent, to close at 34,633.53, within striking distance of its record close of 34,777.76 set on May 7. The Nasdaq Composite finished at 14,522.38, up 18.42 points, or 0.1 percent. For the second week in a row, the Dow, S&P 500, and Nasdaq all rose. This week, the Dow gained 1%, the S&P 500 gained 1.7 percent, and the Nasdaq gained 1.9 percent. What was the driving force behind the stock market? The United States added 850,000 jobs in June, the most since March, while employment growth in May were revised up to 583,000 from 559,000 in May. According to economists polled by The Wall Street Journal, the United States added 706,000 new jobs in June. In an interview Friday, James McCann, deputy chief economist at Aberdeen Standard Investments, said that “very strong gains in hospitality and leisure,” areas hit hard by the pandemic, signal that “we can achieve a much fuller recovery” in sectors that have been running at low capacity or partially closed due to COVID-19 fears. “The services sector is definitely kicking back in a big manner right now.” According to McCann, though, growth in the labor market isn’t robust enough to generate investor anxieties that the Federal Reserve would have to start unwinding its quantitative easing program or raise rates sooner than expected. The job market still has “a lot of spare capacity” despite the “strong pace” of recovery from the COVID-19 crisis. Unemployment increased to 5.9% in June, up from 5.8% in May. According to Rick Rieder, BlackRock’s chief investment officer of global fixed income and head of the asset management giant’s global allocation investment team, this is “primarily due to the return of workers to the labor force.” “Despite the robust headline gain of 850,000 jobs, today’s employment data is more about whether employers have found enough workers to fill the increasingly, and historically, enormous job openings,” Rieder said. “The ratio of job postings to unemployed is approaching pre-pandemic levels, while the ratio of quits to layoffs is reaching multi-decade highs.” Meanwhile, according to the jobs data, average hourly earnings in the United States increased by 10 cents to $30.40 in June, and the workweek in the United States decreased by 0.1 hour to 34.7 hours. In emailed remarks, Sameer Samana, senior global market strategist at Wells Fargo Investment Institute, said, “The average workweek dropped while the participation rate maintained unchanged, indicating that the recovery is gradual and uneven.” The labor-force participation rate, which measures the proportion of able-bodied adults 16 and older who are employed, was 61.6 percent in June, the same as it was in October. Other observers described the outcomes of the carefully watched employment report as progress, but not to the extent that was required to recover from the economic slowdown that occurred during the peak of the pandemic’s economic impact in the United States. Adjusting for workers who mistakenly described themselves as “unemployed but not at work,” UniCredit’s chief international economist Daniel Vernazza calculated that the unemployment rate is closer to 8.9%, “far above the pre-COVID figure of 3.5 percent.” Vernazza noted, “The Fed is likely to decide – correctly – that it has made progress toward its maximum employment target, but not the ‘substantial further progress’ it has set before slowing the rate of asset purchases.” Investors have been focusing on jobs because, despite signs that inflation is picking up in the aftermath of the pandemic, the jobs recovery hasn’t given market participants much confidence. Although the labor report was good, Jefferies economists Aneta Markowska and Thomas Simons said that it is “still short of the 1 million pace that was seen as the basic scenario just a few months ago.” However, Jefferies economists predict that by July, “given the expiration of unemployment benefits in 25 states and exceptionally favorable seasonals,” the country will have added about 1 million jobs each month. A report on international commerce in goods and services for May revealed a deficit of $72.1 billion, which was somewhat more than projected and higher than the $68.9 billion deficit in April. Factory orders rose 1.7 percent in May, up from a revised 0.1 percent loss the month before, according to the Commerce Department, which was somewhat better than anticipated. In 12 of the last 13 months, factory orders have increased. Meanwhile, the oil market was in the spotlight on Friday as the Organization of Petroleum Exporting Countries (OPEC) and Russia (OPEC+), members of the group known as OPEC+, postponed a decision on whether or not to ease output limitations in place to assist stabilize crude prices. The oil decision comes as the group tries to balance the COVID pandemic’s aftereffects on energy demand, as well as concerns about the impact of variants of the coronavirus in some parts of the world, against expectations for higher demand as many economies emerge from lockdowns and stay-at-home protocols imposed to limit the pandemic’s spread. Investors may also be watching the debate over the United States’ debt ceiling, as reports suggest Congress has no intentions to raise it. Which businesses were the subject of the investigation?
International Business Machines Corporation (IBM) is a multinational corporation that manufactures business machines
-4.64 percent for IBM
President Jim Whitehurst is stepping down after three years at the helm of the software behemoth, after Chief Executive Officer Arvind Krishna’s takeover last year. RedHat was acquired by IBM two years ago, and Whitehurst was the former CEO. The stock dropped 4.6 percent.
The Federal Aviation Administration said in a statement that a Boeing cargo jet made an emergency landing in the Pacific Ocean off the coast of Hawaii early Friday and that both individuals on board were rescued. Its stock has dropped by 1.3 percent.
Didi Global Inc. DIDI’s stock slumped 5.3 percent after China’s internet regulator announced it is looking into the company’s cybersecurity threats, according to Dow Jones Newswires.
Tesla Inc. (NASDAQ:TSLA) said on Friday that it produced 206,421 vehicles and delivered 201,250, falling short of FactSet’s forecast of 207,000 vehicle sales.
The stock increased by 0.1 percent.
Virgin Galactic SPCE, +4.05 percent stock rose approximately 4.1 percent after the space tourism company said that one of its founders, Sir Richard Branson, will fly into space.
Shares of donut chain Krispy Kreme DNUT, -8.95 percent fell almost 9% after the firm ended its maiden trading day with a 24 percent gain.
Robinhood Markets HOOD, a brokerage firm,
announced its intention to list under the ticker “HOOD” on the Nasdaq Inc. platform.
What happened to the other assets?
TMUBMUSD10Y TMUBMUSD10Y TMUBMUSD10Y TMUBMUSD10Y TMUBMUSD10Y TMUBMUSD10Y TMUBMUSD10Y TMUBMUSD10Y TMUBMUSD10Y TMUBMUSD10Y T The yield curve and the price of debt move in opposite directions.
The ICE U.S. Dollar Index DXY, which compares the currency to a basket of six major rivals, fell 0.4 percent.
As investors awaited OPEC+’s delayed decision on whether to increase output beginning next month, the US oil benchmark CL00 slipped 0.1 percent to $75.16 a barrel. Gold futures GCQ21 closed at $1,783.30 an ounce, up 0.4 percent.
The Stoxx 600 Europe SXXP closed 0.3 percent higher, marking a 0.2 percent weekly fall, while London’s FTSE 100 UKX slipped less than 0.1 percent, marking a 0.2 percent weekly decline.
In Asia, the Shanghai Composite SHCOMP fell 2% on the day and was down 2.5 percent for the week, while Japan’s Nikkei 225 NIK climbed 0.3 percent on the day but was down 1% for the week./n
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