Stronger-than-expected March hiring sowed stock futures on Friday and pushed up optimism among investment professionals who said vaccines, easing lockdowns and ongoing government stimulus bode well for the markets after the S& P 500 surged past 4,000. Several warned that the rate of growth will eventually pressure the Federal Reserve, which has vowed years of near zero rates.
We were expecting a big number and today's jobs report delivered in a major way, said Eric Merlis, Head of Global Markets Trading at Citizens Bank. It is the flip side of what we saw in March of last year and another clear sign that the U.S. economy is on a strong path to recovery.
Nonfarm payrolls increased by 916,000 last month and February employment was revised up to a 468,000 gain, according to a Labor Department report Friday. The unemployment rate fell to 6% as the labour participation rate edged higher. April contracts on the S& P 500, traded in an extended Good Friday session, extended gains and rose 0.6% to 4,030.
5 at 8: 53 in New York.
Here's what investors and strategists were saying: With 280,000 jobs in the leisure and hospitality sector, it is a clear signal that pockets of the economy that have been hit by pandemic restrictions are starting to come back to life, he added. Overall, the payroll data suggests that the labor market has begun to turn around but we still have a long way to go.
The overall picture adds to the sense that monetary and fiscal policy are in whack with the overall economy, he said. Although we understand that this is currently an unintended objective by both the Federal Reserve and the Biden administration, the odds of explicit consequences have increased.
Overall, certain segments of the labor market- like leisure hospitality and education- remain weak due to the ongoing restrictions. But the opposite is true in many other sectors, with job openings already soaring and voluntary quit rates back to pre-pandemic levels. The implications are that an increase in the wage growth in those better-placed sectors could add to the higher price pressure on prices this year.
The initial knee-jerk reaction is positive; for today, the market is focused on this reinforcing that the economy is going to be strong and that strength will help corporate profitability as a whole. We think there will be this tug of war over economic data on the coming months- how much good data before the Fed changes or flinches? This is an overall very good report: Headline, participation, even average hourly earnings- all good news.
I think it is justified by the increased interest in Treasury rates, but the market is too optimistic on US government hikes. We still think the five-year sector is going to struggle and we are not afraid of being over 1%. The long-end is even tougher: The deficit is$ 3.6 trillion this year, so we will need to attract people for all the Treasury auctions that come up.
Still forecasting 10s to reach 2% later this year. The current uptrend in the rates of interest will likely resume, as life is always a trade off, markets and economy are as well. The better the economy gets, the higher rates go, which will eventually become its own speed bump if it continues, said he. If rates rise, shares will continue to be an either or market; Nasdaq will underperform everything else, and vice versa.
When the year is done, we 'll see the economy of China growing for the first time in over 40 years at a faster pace than the United States economy has in over 40 years. The big hope is that this growth is not inflationary, that it's sustainable. Of course there's going to be imbalances, but from a global growth standpoint, the U.S. is definitely in the lead. While we still have a long way to go to repair the damage that was done to the economy last year, we 're making good progress. The improved job market will increase consumer spending and that coupled with the twin tailwinds of continued monetary and fiscal stimulus is what is going to propel the stock market higher this year.
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