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A surge in US jobs brought back half of S&P 500 companies to pandemic levels.
Stocks rose on speculation that the US economy is recovering at a pace that would not prompt the Federal Reserve to take away the support programs it implemented during the coronavirus crisis. Accordingly, the market was able to set new all-time highs.
More specifically, the S&P 500 posted 0.8% growth, closing at a record value for seven consecutive days. This happened after data showed that US jobs continued to skyrocket for 10 months, and the unemployment rate reached 5.9%. Both reports set the idea that the central bank will not rush to cut its stimulus programs anytime soon.
In short, tech stocks showed great performance, while economically sensitive companies have shown weak results. Dollar also unexpectedly displayed a decline.
ThinkMarkets analyst Fawad Razaqzada commented on this and said the recent US employment report is strong, but not strong enough to trigger inflation. It indeed helped stocks to increase, but could not prompt dollar to continue its rally during the weekend.
E*Trade Financial Director Mike Loewengar added that the data is not enough to change the Federal Reserve's stance on monetary policy.
Seema Shah, chief strategist at Principal Global Investors, also said the higher-than-expected wage data signals an ongoing robust recovery, but rising unemployment suggests some market weakness. This, as a result, gives some "breathing room" for Fed hawks.
And Jason Pride, director of private equity investment at Glenmede concluded that the latest employment report will not significantly change the Fed's calculations, especially since the labor market is still far from full recovery.
Going back to the stock market, few investors say a recovery in corporate earnings will be the key to stock gains. Globally, earning expectations have returned to pre-pandemic levels, and nearly half of S&P 500 companies have raised their annual forecasts in the past three months.
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