|AUTHOR: Jason J. Roque, CFP®, APMA® TITLE: Investment Adviser Rep – CCO TAGS: S&P 500,|
Markets were on the rise last week, but so were initial jobless claims. What does his mean to re-opening efforts?
Markets climbed nicely to open the week. ISM Non-manufacturing (Services) data released a strong reading at 63.7 (Mar). As a reminder over 50 signals expansion and under 50 signals contraction. This is by far the highest reading since the start of the pandemic. Non-Manufacturing is a major reading as approximately 84% of our economy is built on services.
The S&P 500 was minimally changed on Tuesday as available jobs increased sharply. This is a signal of continued re-opening momentum. We are currently in a ‘good news is bad’ cycle as concerns over inflation persist. The more it appears things are going well the more market softness we seem to be getting.
Crude oil inventories fell more than twice the expected amount; however, OPEC supply hikes are expected. Energy prices were negative, but minimally changed. The S&P 500 changed minimally as well, but to the contrary rose for the day.
Markets climbed on Thursday as jobless claims rose. The softer trend in jobs led to NASDAQ leadership and interest rates softening. Energy lost value as natural gas storage increased. The increase was less than expected so it should carry a bullish trend ahead.
Leading into the weekend, markets gave us a buy signal. The S&P 500 rose .76% with most of the gains coming in the last hour of trading. This trend signals no fear in the weekend headline cycle and a buy mentality from investors.
The week carried many bullish signals. The IMF is projecting a 6.4% growth rate for the US in 2021. Service industries showed strength with a 63.7 rating. Oil prices moderated reducing the risk to headline inflation (in the short term). Yet a troubling signal persisted with the initial jobless claims rate increasing for the third straight week. During a time where states are beginning their re-opening process, the expectation is for this statistic to start to moderate. Should this be concerning? No. Most states have not executed their re-opening as of yet. One of the largest states by population, California, is targeting mid-June for their re-opening process. Delays in re-opening just help keep inflation expectations in check at this point.
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