Stocks Jump Following Jobs Report, Tech Leads
4:23 pm Friday, June 04th, 2021
The market has followed yesterday’s weak showing with a strong rebound that has been assisted by the Employment Situation report for May, which missed headline expectations but fit in line with the market’s perennial hope for the continuation of historically loose monetary policy.
The May jobs report has been met with a rally in Treasuries that has the 10-yr yield (-7 bps to 1.56%) back near last week’s low, allaying some of the recent concerns about the inflationary outlook.
Six sectors trade in the green at midday with technology (+1.8%), communication services (+1.3%), and consumer discretionary (+0.6%) leading the way after underperforming yesterday. Growth stocks have found renewed strength with the likes of Apple (AAPL), Amazon (AMZN), Alphabet (GOOG), Microsoft (MSFT), and Tesla (TSLA) showing strong gains, unconcerned by indications that the G-7 is nearing an agreement on a global minimum corporate tax.
On the downside, financials (-0.3%) are under modest pressure as Treasury yields fall and the yield curve flattens a touch. Meanwhile, the remaining decliners sit just below their flat lines. Energy (-0.1%) is slightly lower after gaining 6.0% earlier this week. The pullback comes even as crude oil rises $0.59, or 0.9%, to $69.40/bbl.
U.S. Treasuries experienced some broad-based buying interest following the May employment report, which many thought would leave the Fed inclined to think it has more time, not less, to start talking about tapering its asset purchases. That remains a point of debate, but it was mostly a one-way trade today that saw yields come down across the curve with longer-dated securities driving the flattening action.
May nonfarm payrolls increased by 559,000 (consensus 720,000). The 3-month average for total nonfarm payrolls increased to 541,000 from 533,000 in April.
Factory orders for manufactured goods decreased 0.6% m/m in April (Briefing.com consensus 0.5%) after increasing an upwardly revised 1.4% (from 1.1%) in March. Shipments of manufactured goods were up 0.4% after increasing 2.1% in March.
