Fittingly enough leading into the Labor Day weekend, employment data took center stage during trading this week. Stocks traded in a narrow band (albeit while setting new record highs) before the release of Friday’s August jobs report. While the overall figure of 235,000 new jobs created was lower than many expected, it is important to not place too much emphasis on this single data point. Markets seemed to interpret the news as impetus for the Federal Reserve to potentially extend its easy monetary policy further than outlined by Chairman Jerome Powell last week, and for Congress to approve additional fiscal stimulus this fall.
For the week, the S&P 500 Index finished up 0.56%, while the Dow Jones Industrial Average fell 0.24%. Year to date, the S&P is up 20.72%; the Dow has gained 15.57%. First-time unemployment claims declined to a pandemic-low 340,000, while continuing claims fell to 2.7 million. Next week, enhanced unemployment benefits will come to an end in all states. While early analysis of hiring trends in states that ended extra benefits early didn’t indicate as sharp a bump as some economists expected, it is entirely possible that the effects will take some time to cascade through the labor market. Additionally, fresh limitations in some states arising from the COVID-19 delta variant could also be dampening hiring.
The economy continues to be plagued by supply-and-demand imbalances, as well as by logistical issues affecting supply chains. While these challenges have manifested mainly via higher inflation, lower inventory levels and longer lead times for consumer goods have also arisen. No doubt, the widespread destruction left this week by Hurricane Ida won’t help matters. However, some bright spots – used car prices coming back down to earth, OPEC+ nations agreeing to increased oil production, other commodities returning to more normal trading levels – are breaking through.
For more economic insights and to learn strategies for dealing with the evolving pandemic, please plan to attend our upcoming “Back to Better” webinar on Wednesday, September 22 at 12 p.m. EST. The webinar will feature noted guest speakers Jeffrey Kleintop and Patience Shutts. For more information and to reserve your spot, please click here.
As always, please contact us with any questions; we are here for you every step of the way.