A strong job report gave investors a fantastic start to the long weekend of July 4th as each of the major indices ended the Friday session with new closing highs. And yes, that includes the Dow!
We spent the week thinking about the government employment report … and it was worth the wait. The economy created 850,000 jobs last month, beating expectations by the low 700,000 and more than 200,000 better than the previous month.
Even though the pressure exceeded Wall Street forecasts (as opposed to the May figure), many people still call this a “Goldilocks” report. It obviously shows an economy bouncing back quickly after an unprecedented hike, but market watchers seem to believe that just forcing the Fed to accelerate rate hikes is not enough.
The bottom line on Friday was that the S&P reported its seventh straight record close, gaining 0.75% to 4,352.34. The NASDAQ is also back on a new high with a rise of 0.81% (or almost 117 points) to 14,639.33.
This is the tech-heavy index’s first milestone since last Tuesday. The Dow hadn’t seen a closing high since May 7 … until today. The index jumped 0.44% (or about 152 points) to a new high of 34,786.35.
For the week, NASDAQ was ahead, up 1.9% as technology remains the pride of the market. The S&P is very close, up 1.7% after pitching seven sessions in a row, while the Dow participated, up 1% over the five days.
Today’s report certainly got the lion’s share of the attention this week, but let’s keep in mind that it is actually the third positive job report in as many days. Wednesday’s ADP employment report slightly exceeded expectations, creating 692,000 jobs in June, while yesterday’s jobless claims report fell back below 400,000 and dropped expectations at 364.
Add in some other positive economic data, a strong earnings season (starting a new one), a quick launch of vaccines and a Fed that is still very supportive amid a “temporary” spike in inflation; and it’s no wonder the first half grand total was so epic with hopes for more in the second half.
Before we celebrate Independence Day, let’s review the first half results … because they deserve to be repeated! The S&P rose 14.4%, the Dow 12.7% and the NASDAQ 12.5%.
After such astonishing accomplishments, the editors are now wondering when the pullback will come. And they’re actually pretty excited because it gives them the chance to shop at more attractive prices. But let’s think about it next week and enjoy our nation’s birthday …
The current portfolio highlights:
TAZR dealers: Before the weekend of July 4th kicks off, Kevin has a few purchases for the portfolio. First, he picked up Chinese e-commerce giant Alibaba (BABA), which collapses today after China proposed rules to punish illegal e-commerce prices. The editor calls this “a slap on the wrist for BABA,” which the company will no doubt obey to avoid trouble. Hence it is an opportunity. The service also added Penn National Gaming (PENN), a $ 12 billion gaming company that is seeing sales decline as the pandemic loses its hold. The company announced strong second quarter results late last month that bode well for its report due out in August. Kevin added 5% allocations to each. Read the full report to learn more about these purchases, including a look at what analysts said.
Headline dealers: “Large-cap stocks experienced a euphoric surge into the long weekend of Independence Day. This morning’s robust employment report beat expectations while wage growth remained subdued, fueling a new wave of upward sentiment in stocks and bonds alike.
“We had three record closings from all three large-cap indices, marking the seventh all-time high in a row (the longest streak since last August). All the momentum is on the up, but I’m ‘increasingly nervous about the overbought area in which both the S&P 500 and Nasdaq 100 closed today.
“My outlook remains optimistic for the second half of 2021, but a market decline may be necessary. As I said in previous comments, there is a record level of utility costs ($ 5.5 trillion in the money markets) just waiting to buy the slump. ”- Dan Laboe
Counterstrike: “Goldilocks and the dead bears. Are there any shorts left?
“The S&P hit a record high for the seventh day in a row. This is the first time since 1997.
“We are still in an amazing bull market, but options feel limited at these heights. Let’s take profits slowly and try to manage the portfolio and raise some cash.” – Jeremy Mullin
Happy 4th of July!
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