Business & Investment

Blowout job reports could boost stock prices in the coming week

Traders work on the floor of the New York Stock Exchange.

NYSE

April started with a rally, The market may continue to rise as the month begins, according to strategists.

U.S. Department of Labor Amazingly strong March work This Friday’s report showed that 916,000 jobs were added in March, compared to the 675,000 economists expected.

It’s expected to be pretty quiet last week, with some economic reports and Federal Reserve Board speakers regaining calm before the earnings season.

The Institute for Supply Management Service Sector Survey will be released next Monday and should be paid close attention thereafter. Laboratory manufacturing survey It came in at the highest level since 1983. The minutes of the last Federal Reserve Board of Governors will be released next Wednesday afternoon.

“I think literally everything, or almost everything, should be very strong for the foreseeable future,” said Stephen Stanley, chief economist at Amherst Pierpont. ..

Economists Very strong second quarter When the economy resumes and stimulus measures begin, it should be positive for stocks unless interest rates rise sharply.

As the calendar entered April, major stock indexes rose sharply.

S & P 500 rose 1.2% on Thursday Close new record Of 4,019.87. Meanwhile, the Dow Jones Industrial Average rose more than 170 points, and the technology-intensive Nasdaq Composite index rose 1.8%.

Benchmarks of interest Treasury yield for 10 yearsOn the other hand, Friday morning was high at 1.68%, well below the recent high of 1.77% reached at the beginning of the week.

Ten years is important because it affects mortgages and other loans, but recently it has also been negatively correlated with tech stocks. As the 10-year yield increased, the technology declined.

Look at profits

Sean Snyder, Head of Investment Strategy at Citi US Wealth Management, said: “That’s what we should turn to next.”

He said the market often weakens shortly before the earnings season.

Revenues for the first quarter are expected to increase by 24.2% year-on-year, according to Refinitiv. The results of the previous year will include the impact of the pandemic shutdown in the first quarter.

Some strategists expect the earnings season to provide more positive comments from companies, which could lead to positive forecast revisions and fuel the equity market.

“About 13 months ago, COVID-19 sent us home from the office and children from school. The pandemic almost closed the global economy, but unprecedented policy responses lifted the economy. Leaded to the shortest recession and the steepest equities, said Jonathan Gorab, US Equity Strategist at Credit Switzerland.

According to Gorab, the 78% increase in the S & P 500 in March last year was heavily driven by earnings.

“In each of the last two recovery periods, the positive revision trend lasted for a couple of years, providing a significant tailwind for the market,” he said.

He added that economists continue to revise growth forecasts higher.

“Our work shows that for every 1% change in GDP, profits change by 2.5 to 3%, and profits improve even more,” Golub writes.

April is far from the cruelest month

Aside from the expected return on earnings, some strategists have expected April to be a bullish time for equities, as historically.

For example, Fundstrat’s managing partner Tom Lee VIX, The Chicago Board Options Exchange Volatility Index states that it has reached pre-pandemic levels and is constructive for equities.

VIX is calculated based on S & P 500 puts and calls traded on CBOE.

Lee also pointed out The market’s April performance is better than usual when the market closes at high prices on March 31, the last day of the first quarter, and April 1, the first day of the second quarter.

According to Lee, when the last two days have been positive since World War II, the S & P 500 rose an average of 2.4% in April, but a normal 1.3% rise.

“This is the point [a] Positive environment and equity risk / compensation. This keeps us constructive, “he wrote in a memo.

Sam Stovall, CFRA’s chief investment strategist, said the market will enter April and the second quarter with a tailwind.

“April is usually good. It’s the best month in terms of average price volatility. The second quarter isn’t a bad quarter on average. It has risen an average of 2.8% since 1990, with all 11 sectors showing an average rise. I’m recording, “he said.

Stovall said some cycles could be ahead of them and energy, industry and finance could be suspended. These sectors are outperforming while technology is lagging.

The market will enter the “sale in May” period in the second quarter. The market maxim “sell and disappear in May” is based on the idea that stock prices tend to underperform from May to October.

“High tech has done pretty well in its sale in May, and it’s probably not the time to start breaking away from tech,” Stova said. “Engineers may receive short-term amnesty.”

Supply first

The Federal Reserve Board will release the minutes of the final meeting Wednesday afternoon, and investors will review them for new comments on inflation.Investors are becoming more concerned about stimulus as fuel and other commodity prices are already rising May increase inflation.

Chairman of the Federal Reserve Board Jerome Powell After the March meeting, the Fed Inflationary pressures are temporary, but markets are still concernedThat can be a bigger problem. Inflation is now well below the Fed’s target of 2%.

Producer Price Index — This Measure the average price change Received as its product by domestic producers — also carefully monitored when reported on Friday.

Regarding Federal Reserve Board speakers, Powell is expected to discuss the global economy at the International Monetary Fund panel Thursday, hosted by CNBC’s Sara Eisen.

Other central bank speakers include Federal Reserve Bank of Chicago Governor Charles Evans on Tuesday and Wednesday, and Richmond Fed President Tom Birkin on Wednesday.

Treasury Secretary Janet Yellen I will speak at the Chicago Council on Global Affairs webinar on Monday’s economic recovery.

Calendar one week ahead

Monday

Factory order at 10 am

10 am Non-manufacturing data from the Supply Chain Association

11:00 am Treasury Secretary Janet Yellen of the Chicago Council on Global Affairs

Tuesday

10am JOLTS Jobs

4:05 pm Chicago Fed President Charles Evans

Wednesday

8:30 am Trade balance

9am Chicago Fed Evans

11:00 am Dallas Fed President Robkaplan

12:00 pm Richmond Fed President Tom Birkin

Minutes of the Federal Open Market Committee at 2:00 pm

Consumer credit at 3:00 pm

Thursday

8:30 am Unemployed billing

11:00 AM Fed President James Bullard

12:00 pm Federal Reserve Board Chair Jerome Powell discusses economy at International Monetary Fund panel

Friday

8:30 am Producer Price Index

Wholesale inventory at 10am

Blowout job reports could boost stock prices in the coming week

https://www.cnbc.com/2021/04/02/blowout-jobs-report-could-power-stocks-higher-in-the-week-ahead.html Blowout job reports could boost stock prices in the coming week

Back to top button