September 10, 2021

Weekly Market Commentary September 7th to September 10th 2021

In a slow week for economic news, the July JOLTS Job Openings stood out as a major surprise, coming in at 10.9 million, higher than expected and the prior month. The survey reflects heightened employer demand for seasonal positions which may fade over the next few reports. Jobless Claims came in at their lowest level since the pandemic began, registering 310K vs. a 340K estimate and 350K prior. This was a bright sign, showing that workers are quickly pursuing new positions in the face of reduced unemployment aid and rising wages. Louisiana had the highest number of new claims, owing to impacts from Hurricane Ida.

PPI (Producer Price Index) was the week’s most closely watched number. Producer prices rose 0.7% from last month and shot up 8.3% annually. This was close to expectations and marked slower monthly growth than what was seen in June and July. Meat prices accounted for a significant chunk of the inflation, growing a staggering 8.5% monthly due to a severe shortage of labor at meatpacking plants. Transportation prices are growing rapidly, up 2.8% this month on top of a 2.7% gain in July, due in large part to a global container shortage. Expect supply chain costs to weigh on next quarter’s corporate earnings, especially for industrial and retail businesses. We don’t mention China PPI often, but it is an important metric given our countries’ trade relationship. Their PPI grew 0.8% monthly and 9.5% annually, continuing a brisk pace. Continued COVID outbreaks in Asian nations have damaged supply chains in the region, with an outsized impact on semiconductors.

It was a tough shortened trading week for stocks, with the S&P 500 falling -1.7% to close the week at 4,458. The NASDAQ was down a similar amount to finish at 15,115. The Dow Jones suffered the most, skidding -2.1% to 34,608. Shares of Apple and UnitedHealth Group weighed on the index Friday. In fixed income, the yield on the 10-year U.S. Treasury rose 2 basis points to 1.34%.

Next week we will see a CPI reading, a survey on small business optimism, Industrial Production data, and Retail Sales.