THIS WEEK'S UPDATE

THE WEEK ON WALL STREET

Overcoming jitters about the Delta variant and the reintroduction of mask

requirements, stocks climbed higher on strong employment data and a fresh batch

of strong corporate earnings. The Dow Jones Industrial Average rose 0.78% while

the Standard & Poor’s 500 advanced 0.94%. The Nasdaq Composite index gained

1.11% for the week. The MSCI EAFE index, which tracks developed overseas stock

markets, picked up 1.61%.

 
PUSH AND PULL

The crosscurrents of strong corporate profits and the rise in Delta variant infections

led to a roller coaster week of price action, as markets alternated between daily gains

and losses. By Thursday, however, investors appeared to grow more optimistic that

the economic reopening was not under serious threat when back-to-back

employment reports suggested that the economic recovery remained on track. A

favorable initial jobless claims report was enough to send the S&P 500 and Nasdaq

to new all-time highs. Thanks to Friday’s stronger-than-expected employment

report, the S&P 500 managed to add to its previous record close, while the Dow

Jones Industrial Average set its own record high. The more tech-centric Nasdaq,

however, slipped off its highs. 

 
EMPLOYMENT BRIGHTENS

Last week reinforced the idea of an improving labor market. After a disappointing

ADP (Automated Data Processing) National Employment Report that showed a

slowdown in private-sector hiring, with just 330,000 new jobs added, subsequent

employment data were much more encouraging. Thursday’s report of a modest drop

in initial jobless claims to 385,000 and a more substantial drop of 366,000 in

continuing claims was followed by a solid employment report on Friday, which

showed employers had added 943,000 new jobs in July—the biggest jump since

August 2020. This hiring increase shaved the unemployment rate to 5.4%, down

from June’s 5.9% rate.  The "extra" unemployment benefits are set to sunset in

September.  I hope those who are hanging onto the extra free money rather than

getting back to work aren't in for a rude awakening when there's a mad dash to get

a real job next month.  It is sad when Burger King is offering a $1,000 sign on bonus.

Thank big government for that.

 
THE WEEK AHEAD: KEY ECONOMIC DATA

Monday: JOLTS (Job Openings and Labor Turnover Survey).

Wednesday: Consumer Price Index. 

Thursday: Jobless Claims. 

Friday: Consumer Sentiment.

 
THE WEEK AHEAD: NOTABLE COMPANIES REPORTING EARNINGS

Monday: Air Products and Chemicals, Inc. (APD), Tyson Foods, Inc. (TSN).

Tuesday: Sysco Corporation (SYY), Coinbase Global, Inc. (COIN).

Wednesday: Nio, Inc. (NIO), eBay, Inc. (EBAY).

Thursday: The Walt Disney Company (DIS), Baidu, Inc. (BIDU), Doordash, Inc.

DASH), Airbnb, Inc. (ABNB).

 
FINAL THOUGHTS
While the media will try and scare you to death, the delta variant of Covid should be

peaking this week or next and may have peaked in Florida last week.  This is based

on the forecast of data scientists using math and not fear.  There are lots of earnings

reports continuing to come out.  A few of the epicenter type companies like Disney

and Airbnb are reporting this week and it will be interesting to hear what they have

to say.  Stay tuned…