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Weekly Economic Update: Labor Numbers Leads Stocks

Presented by Nicholas Wealth Management

June 7th , 2021


Weekly Market Update

In this week’s recap: Positive labor numbers lead stocks to a modest gain.


The Week on Wall Street

A strong, but not too strong, employment report sparked a rally on the final day of trading, propelling stocks to a modest gain for the week.

The Dow Jones Industrial Average climbed by 0.66%, while the Standard & Poor’s 500 added 0.61%. The Nasdaq Composite index increased by 0.48%. The MSCI EAFE index, which tracks developed overseas stock markets, edged up 0.10%.1,2,3


Rotation Continues

Markets have traded sideways since mid-April, though beneath the surface has been ongoing sector rotation. Last week continued that trend.

While stocks ended on a strong note, the performance of industry sectors varied widely. Energy, real estate, utilities, and a number of reopening stocks performed well, while consumer discretionary, communication services, healthcare, and technology stocks lagged.

The Fed announced on Wednesday that it will soon begin selling the corporate bonds and exchange-traded funds it had accumulated during the pandemic, an action that some observers interpreted as a harbinger of an approaching change in its easy-money policies. But the below-consensus May job figure on Friday buoyed investors who believe the Fed will not change course soon.4,5


Labor Market Recovery

It was a good week for the labor market. Initial jobless claims fell to pre-pandemic levels (385,000), ADP (Automated Data Processing) reported a big jump in private-sector hiring (978,000), and the monthly employment report saw nonfarm payrolls increase by 559,000 in May – a healthy increase even though it fell short of some expectations. The unemployment rate declined to 5.8% from April’s 6.1% level.5,6,7

Friday’s report showed that total employment numbers still remain about seven million jobs below their pre-pandemic levels. It also showed an acceleration in wage gains, which rose 2% year-over-year following the 0.4% gain in April.8



Tip of the Week

An insurance-needs analysis is a good idea when you reach your forties. You may learn more about the role of life insurance in your overall financial strategy.


Media

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CITATIONS:

1. The Wall Street Journal, June 4, 2021

2. The Wall Street Journal, June 4, 2021

3. The Wall Street Journal, June 4, 2021

4. The Wall Street Journal, June 2, 2021

5. CNBC, June 3, 2021

6. CNBC, June 3, 2021

7. CNBC, June 4, 2021

8. CNBC, June 4, 2021