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- Stocks were mostly positive last week. We saw global markets (represented by the MSCI All Country World Index) up 1.3% and domestic stocks (represented by the S&P 500 Index) up 1.3%. In the U.S., we saw the NASDAQ Index lag as the technology and consumer discretionary sectors struggled. Leading the week was developed international stocks, which were up 2.6% for the week.
- Much of the focus during the week was on the Friday jobs report. In a surprise to the downside, the economy only added 266,000 jobs for April which was below expectations. The unemployment rate went from 6.0% up to 6.1%. While we still need about seven million jobs to get back what was lost last year, we still expect labor markets to continue their recovery.
- Contrary to conventional wisdom, the Friday jobs report was actually a positive event for markets. The fact that labor markets are still recovering reinforces the Fed’s position of keeping rates low in the near term.
- According to FactSet, the Q1 earnings from S&P 500 companies are expected to increase nearly 50% over last year’s Q1 earnings. Only about 10% of companies are left to report their results.
- While some countries continue to fight the spread of the pandemic, we did get some additional vaccine news last week. The WHO granted emergency use for a vaccine created by a Chinese state-owned company.
- Once again last week we saw the cyclical sectors outperform the growth-oriented sectors in markets. This has been a theme this year, as interest rates and valuations have put some pressure on high-growth stocks. For the year, the financials, materials, industrials, and energy sectors are leading markets. This is one reason we advocate for a balanced, diversified portfolio and a proactive approach as these leadership rotations can happen quickly.
- I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.
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