Stocks Jump Again After Nonfarm Payrolls Data
4:12 pm Friday, July 02nd, 2021
The S&P 500 and Nasdaq Composite have set all-time highs (yet again) following a June employment report that showcased decent jobs growth but came up short in other measures of labor market activity.
Briefly, nonfarm payrolls increased by 850,000 (consensus of 680,000), which was better than expected, but the unemployment rate (5.9%), average hourly earnings (+0.3%), and the average workweek (34.7) missed expectations. In addition, the labor force participation rate (61.6%) was unchanged, and there were higher rates of unemployment for minority groups.
The narrative being thrown around is that the report supports the case for the Fed to remain patient with its extraordinarily accommodative stance, notwithstanding the decent jobs growth. Fed Chair Powell has been concerned about an uneven economic recovery, and this report wasn’t as robust as the headline jobs numbers initially suggested.
Looking at the market action, higher-quality growth stocks have taken the leadership roles from the value stocks, aided by the valuation-oriented appeal of a 10-yr yield trading lower by three basis points to 1.44%. The S&P 500 information technology sector (+1.0%) was the only sector up 1%, while the energy (-0.5%) and financials (-0.2%) sectors struggled in negative territory.
Mega-caps Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG), and Amazon.com (AMZN) were pulling their weight and are doing a good job offsetting the underlying negative bias in the market. Declining issues outpace advancing issues at the NYSE and Nasdaq.
Johnson & Johnson (JNJ), while not quite in the same league as the aforementioned stocks, was another mega-cap that’s outperformed. The company said new data for its COVID-19 vaccine showed persistent activity against the Delta variant with long-lasting durability of response.
IBM (IBM) and Broadcom (AVGO) were two notable laggards and exceptions within the tech sector. IBM announced President James Whitehurst is leaving the company. Separately, the FTC charged Broadcom with illegal monopolization and ordered the company to cease its anticompetitive conduct.
