April 12, 2021

Weekly Market Commentary April 5th to April 9th 2021

The ISM Non-Manufacturing survey reached a new all-time high in March at 63.7. The strength was broad and wide as all 18 services industries reported growth. This is the tenth consecutive month of expansion for the services sector, which remarkably only experienced two months of contraction (March and April of 2020 during initial pandemic lockdowns) in the past 134 monthly reports.

The JOLTS Jobs report came in well ahead of consensus for February with 7.37 million job openings reported. This is the highest level on record for the survey. Initial Jobless Claims however, rose for a second consecutive week. New claims increased 744k, more than was expected, and Continuing Claims were 3.73mm, modestly lower than the prior week, but higher than anticipated. The week-to-week layoff situation continues to be lumpy, but the longer-term trend continues to move in the right direction to support an improving employment situation.

Producer Prices (PPI) rose by 1.0% in March. Higher than the previous reading and consensus estimate of 0.5%. On a year-on-year basis, PPI was higher by 4.2%, ahead of the prior reading and estimate of 3.8%. This is a 10-year high, which certainly opened eyes to rising inflation at the producer level. Energy costs were a key driver, higher by 5.9% as well as building materials, led by a 17% increase in steel prices and double digit increases in plywood and paper. Excluding the volatile food and energy components, the reading was 3.1%.

The S&P 500 advanced by 2.7% on the week to a new record high level of 4,128. Technology stocks led the gains, driving the Nasdaq Composite higher by 3.1%. The 10-Year U.S. Treasury Yield traded in a range of 1.73-1.63%, closing the week at 1.66%.

Key economic releases next week include the Consumer Price Index, Retail Sales, Industrial Production, Housing Starts, Building Permits and Weekly Jobless Claims.