Hello, I’m Greg Curvall, Senior Portfolio Manager with Fifth Third Bank.
Major U.S. equity benchmarks finished mostly higher last week, though the Nasdaq suffered losses. The S&P 500 recorded new all-time highs on Friday, as a big miss in the April Jobs Report was seen as cover for the Fed to keep monetary policy very accommodative.
The yield on the US 10-year Treasury was down seven basis points and finished the week at 1.56%.
The big data release last week was the April Nonfarm Payrolls Report. Economists were expecting close to one million jobs added for the month, however, only 266 thousand jobs were added, and the previous month’s number was revised lower as well. The unemployment rate actually ticked higher, to 6.1%. Many argue that the enhanced employment benefits in the last stimulus package are probably keeping would-be workers on the sidelines, particularly in the service industry, despite near record open positions.
The U.S. continues to trend in the right direction with COVID cases declining and vaccinations averaging 2 million per day over the past week. The Biden administration announced it will not protect intellectual property rights for the COVID-19 vaccine due to the "extraordinary circumstances."
Globally, however, unfortunately some countries are still struggling. As of Thursday, India now accounts for more than half of global COVID cases. The Indian government has so far resisted calls for another nationwide lockdown, and instead has left it up to local jurisdictions. Globally, are now exceeding 156 million and deaths amount to more than three-and-a-quarter million.
As of Friday’s close, about 88% of S&P 500 companies have reported first quarter earnings. Of the earnings results, 86% of reports have surpassed estimates, which is a record high. On average, companies are beating estimates by 22%, making this the second highest level on record.
Growth in manufacturing cooled last month amid supply chain challenges. The ISM Manufacturing Index, which is a pretty good proxy for economic growth, missed estimates and continues to trend lower. The index is currently at around 61, down from a 37-year high of about 65 it hit back in March. It’s worth noting that readings above 50 indicate economic expansion.
In the week ahead the economic calendar has some noteworthy reports. This week we’ll see the Small Business Optimism survey. We’ll also get some timely inflation data with the Consumer Price Index (or CPI) and Producer Price Index (or PPI). Retail Sales and CPI might be the most anticipated reports this week. Economists expect to see measured increases in these numbers as vaccinations in the U.S. have ramped up and parts of the economy continue to reopen.
As always, we’ll be watching and reporting back to you next week. Thank you.