Spring has officially sprung here in Las Vegas! With the warmer weather and the continued buoyed hope of a full re-opening we had a market that seemed to gain some traction this week. With an attempt to continue to gain clarity the market has seemed to calm itself from the last couple of weeks and hopefully has a found a bit of long-term direction.
U.S. equities are heading into the extended Easter holiday weekend positive, moving higher in small doses throughout the week. A return of positivity in growth stocks, notably Information Technology and Communication Services sectors, led the way in the wake of yesterday's unveiling of President Biden's $2 trillion infrastructure spending plan.
With a continued optimism in both economic recovery and earning recovery, the markets remained resilient as the new quarter began, which seemed to counter the recent spike in Treasury yields and the bounce in the U.S. dollar. On the economic front, the ISM Manufacturing Index jumped to its highest point since the early 1980s, while initial jobless claims came in a bit higher than expected.
March nonfarm payroll report came in with The Bureau for Labor Statistics stating 916,000 new jobs were created last month, compared to a consensus market forecast of around 675,000, tipping the headline unemployment rate down to 6%. February's total was also revised to show 468,000 jobs created in the month, up 89,000 from the initial estimate.
"Just as important as the big jobs number are the types of jobs added. While leisure and hospitality, the hardest-hit sectors, gained the most, other gains show the economy is broadly under repair," said Robert Frick, corporate economist at Navy Federal Credit Union. "But while we'll likely see strong jobs reports for months, within the March report were clues of problems we'll face in the future."
Onto the numbers for this week --
The S&P 500 (+1.1%) reached a new milestone this week by topping the 4000 for the first time, although the Nasdaq Composite was the outright winner with a 2.6% gain. The Dow Jones Industrial Average (+0.2%) also set an all-time high, but it barely ended the week higher, while the Russell 2000 rose 1.5%.
The week started on a cautious note after Credit Suisse (CS) and Nomura (NMR) warned of potential substantial losses after one of their clients, reportedly Archegos Capital Management, defaulted on margin calls and was forced to sell more than $20 billion in stock in the prior week.
Contagion effects were dismissed by strategists, though, and several U.S. banks with Archegos exposure said their losses were immaterial. The rest of the week saw a return of the heavily-weighted growth stocks, thanks to quarter-end rebalancing/first-of-the month inflows, a retracement in long-term interest rates, and positive-minded analyst recommendations.
The influential information technology (+2.1%), consumer discretionary (+2.2%), and communication services (+3.4%) sectors advanced the most this week with gains over 2.0%. Conversely, the energy (-0.4%), materials (-0.3%), health care (-0.6%), and consumer staples (-0.8%) sectors closed lower.
Cyclical stocks underperformed despite the ISM Manufacturing Index for March rising to 64.7% (Briefing.com consensus 61.2%) from 60.8% in February and the Conference Board's Consumer Confidence Index jumping to 109.7 in March (Briefing.com consensus 97.0) from 90.4 in February.
Separately, President Biden unveiled a $2.3 infrastructure spending plan on Wednesday that included increases in corporate taxes to help finance the spending. In addition, the White House press secretary said that the administration will seek another stimulus bill after passing the infrastructure plan.
The 10-yr yield increased two basis points to 1.68%, although it was flirting with 1.78% early in the week. The U.S. Dollar Index increased 0.2% to 92.90.
Hoping you have a wonderful Easter weekend, and as always it is my pleasure to bring you this weekly update. If you or anyone you care for would like to discuss these topics or any that may be concerning you currently, please feel free to reach out and schedule some time with me.
Justin J. Long CFP®
Founder/Lead Advisor
Diazo Wealth Group
702-745-1800 Direct
702-278-6560 Cell
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Source: Week in perspective provided by Briefing.com. Briefing.com offers live market analysis on their web site www.Briefing.com.
Innovative Adviser Solutions, LLC, a registered investment adviser, dba Diazo Wealth