Broker Check


| September 07, 2021


Stocks were mixed last week amid conflicting economic data and continued spread

of Delta variant infections. The Dow Jones Industrial Average slipped 0.24% during

the five trading days. But the Standard & Poor’s 500 tacked on 0.58% and the

Nasdaq Composite index rose 1.55%. The MSCI EAFE index, which tracks developed

overseas stock markets, gained 1.51%.


Investors gravitated toward the high growth technology and communication

services sectors, as well as the more defensive sectors, such as utilities and real

estate. Reopening stocks were weighed down by Delta variant fears and a retreating

consumer, while energy struggled to bounce in the wake of Hurricane Ida shutting

down energy production and refining capacity. Stocks appeared to shrug off a shaky

employment report on Friday, despite the questions it raised about economic

growth in the months ahead.


After initial jobless claims reached a new pandemic low on Thursday, the August

employment report on Friday came in below expectations as payrolls expanded by

235,000. Adding to the subdued report was a 4% decline in the number of hours

worked by employees. On the positive side, the Friday report showed the

unemployment rate fell to 5.2%, while wage growth rose 0.6% from July and

increased 4.3% from August 2020. The weak employment report may reflect a pause

in hiring due to the Delta variant. It could additionally muddy the outlook for the

Federal Reserve, which has indicated it may begin tapering before year-end. The

uncertain jobs picture may force the Fed to push its tapering start date into 2022.


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

Thursday: Jobless Claims.


Tuesday: Coupa Software, Inc. (COUP), Uipath, Inc. (PATH).

Wednesday: Lululemon Athletica, Inc. (LULU), Gamestop Corporation (GME).

Thursday: Zscaler, Inc. (ZS), Affirm Holdings, Inc. (AFRM).

Friday: The Kroger Co. (KR).


They say markets climb a wall of worry and it would appear that is exactly what we

are seeing. All kinds of “what ifs” are espoused in the media about inflation, the

Delta variant, unemployment, and the like. Yet, the market continues to grind

higher. The government gravy train of extra unemployment ends this week, and it

should be interesting. Now we start to get a sense of whether inflationary trends

really are transitory or not. If inflation is transitory and people go back to work and

supply chains ease and if wage inflation slows it would be a sign the Fed can take its

time with monetary policy. Markets would view this positively, perhaps pushing

even higher in anticipation of a long and drawn-out tapering process. However, if

we see inflation continue to rise it would mean the Fed may have to act sooner and

some areas of the economy wouldn’t like that so much. Something to worry about,

but isn't there always?

I can’t remember a month out of the last 25 years where there wasn’t some calamity

that might befall the markets. However, the market is much, much higher than it

was 25 years ago. So yes, we climb the wall of worry. Sure, there will be a pullback

at some point, maybe even a sizeable one. However, it won’t be the end of the world

(even though the media will make it feel that way) and we will move on again to

greener pastures as we always have. Have a great rest of the week!