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Market Snapshot

https://www.briefing.com/stock-market-update

Dow 34777.76 +229.23 (0.66%)
Nasdaq 13752.27 +119.39 (0.88%)
SP 500 4232.60 +30.98 (0.74%)
10-yr Note 0/32 1.566
NYSE Adv 2435 Dec 829 Vol 871.7 mln
Nasdaq Adv 2706 Dec 1360 Vol 4.3 bln

Industry Watch
Strong: Energy, Materials, Industrials, Information Technology, Real Estate
Weak: Consumer Staples

Moving the Market

-- April employment report was relatively disappointing, but investors found reasons to stay constructive on the market

-- S&P 500 and Dow closed at record highs, cyclical stocks led the advance, growth stocks benefited from dip-buying efforts

-- Nonfarm payrolls increased by just 266,000 in April (Briefing.com consensus 1,000,000)

-- 10-yr yield recovered from post-employment report drop

Market looks past relatively disappointing employment report
07-May-21 16:15 ET
Dow +229.23 at 34777.76, Nasdaq +119.39 at 13752.27, S&P +30.98 at 4232.60

[BRIEFING.COM] The S&P 500 (+0.7%) and Dow Jones Industrial Average (+0.7%) set intraday and closing record highs on Friday, as investors found reasons to look past the huge payrolls miss in the April employment report. The Nasdaq Composite (+0.9%) and Russell 2000 (+1.4%) outperformed.

Nonfarm payrolls increased by just 266,000 in April, which was well below the Briefing.com consensus of 1,000,000 and the downward revision for March. In addition, the unemployment rate was 6.1% (Briefing.com consensus 5.8%), versus 6.0% in March, and average hourly earnings increased 0.7% (Briefing.com consensus -0.1%).

After an initial shock, market participants interpreted the report to suggest at least two things: 1) the Fed will feel assured that it's still not time to start talking about tapering asset purchases, and 2) it was a temporary blip in the economic recovery as the extended unemployment benefits may have provided a disincentive for people to return to work.

Another narrative put forth by the Biden administration and some Democratic lawmakers was that the report painted the case for passing the proposed government spending plans. The reaction in the market made it clear that both growth and value investors had an interpretation they liked.

Every sector in the S&P 500 closed higher, paced by the energy (+1.9%), real estate (+1.2%), industrials (+1.1%), materials (+0.9%), and information technology (+0.8%) sectors. The consumer staples sector (+0.01%) underperformed and closed a hair above its flat line.

Besides the leadership from the cyclical stocks, growth concerns were dismissed by higher copper prices ($4.75/lb, +0.14, +3.2%) and a turnaround in the 10-yr yield, which went from 1.48% in the wake of the employment report to 1.58%, or two basis points above Thursday's settlement.

Growth-stock investors may have also used the headline jobs miss as a better reason (compared to yesterday's Merkel vaccine news) to buy the dip in the information technology sector and other beaten-down spaces. The ARK Innovation ETF (ARK 109.72, +1.38, +1.3%) increased 1.3% but ended the week down 9%.

The 2-yr yield decreased one basis point to 0.14%. The U.S. Dollar Index decreased 0.8% to 90.22. WTI crude futures increased 0.4%, or $0.25, to $64.94/bbl.

Reviewing Friday's economic data:

The April employment report was surprisingly weak, with just 266,000 jobs added to nonfarm payrolls (Briefing.com consensus 1,000,000) and downward revisions to March. April unemployment rate was 6.1% (Briefing.com consensus 5.8%), versus 6.0% in March. April average hourly earnings increased 0.7% (Briefing.com consensus -0.1%) versus a 0.1% decrease in March.
The key takeaway from the report is that net job gains were negative, excluding the leisure and hospitality industry, which added 331,000 jobs. It is a stunning slowdown from March and has ignited the argument that extended unemployment benefits have created a disincentive to look for work. In turn, it has also ignited the idea that the market has gotten ahead of itself with its recovery/reopening enthusiasm.
Consumer credit increased by $25.8 bln in March after increasing a downwardly revised $26.2 bln (from $27.6 bln) in February.
The key takeaway from the report is that it was the second straight month that the expansion in consumer credit exceeded $25 billion, underscoring the improved lending demand in a recovering economy.
Wholesale inventories increased 1.3% m/m in March (Briefing.com consensus 1.4%) following an upwardly revised 1.0% increase (from +0.6%) in February.

Investors will not receive any notable economic data on Monday.

Russell 2000 +15.0% YTD
Dow Jones Industrial Average +13.6% YTD
S&P 500 +12.7% YTD
Nasdaq Composite +6.7% YTD

Crude futures edge higher, energy stocks in the lead
07-May-21 15:25 ET
Dow +253.82 at 34802.35, Nasdaq +142.95 at 13775.83, S&P +35.80 at 4237.42

[BRIEFING.COM] The S&P 500 is trading at session highs with a 0.8% gain and is on track to close at a record high.

One last look at the S&P 500 sectors shows energy (+1.7%), industrials (+1.1%), and information technology (+0.9%) leading the advance, while the consumer staples sector (+0.1%) trails the action with a 0.1% gain.

WTI crude futures settled higher by 0.4%, or $0.25, to $64.94/bbl.