Markets “In a Nutshell” for May 10, 2021
Investment Week at a Glance
Stocks finished up for the week. The Dow Jones Industrial Average was up 2.67%, the S&P 500 rose 1.23%, the New York Stock Exchange Composite (2,000 stocks) rose 2.29% and the average investors index (Value Line Index) was up 2.03%. Foreign stocks (DJ Global ex U.S.) were up 1.61%. Bond prices were higher for the week, with the 10-year U.S. Treasury ending the week 5 basis points lower at 1.60%. (Data source: Wall Street Journal)
Stocks Regain Momentum
Stocks rose broadly for the week, benefiting “reopening” sectors like Energy and Materials the most, despite another reminder that inflation is still a looming and substantial risk in the market. Last week’s big headline news were comments made by Treasury Secretary Janet Yellen who essentially stated that interest rates will have to go up if the economy begins to overheats and inflation rises faster than expected. While that is historically how the Federal Reserve always tries to combat inflation, the market seemed to take it more as a prediction rather than an example of a policy route and stocks sank on the news. While Secretary Yellen walked her comments back later in the day and stocks recovered their brief, but relatively large losses, this event was just another example of how much the stock market is riding on the back of low interest rates today and for the foreseeable future. This summer through the end of the year will be a delicate time for government and Federal Reserve officials who will have to carefully word their strategy for coming out of the pandemic and how they plan to retreat from their ultra-accommodative economic policies. (Barron’s)
Disappointing Jobs Report
The April jobs report released last Friday was one of the most disappointing in recent memory and brought into question all of the government responses that seem to be keeping workers on the sidelines. About 1 million jobs were expected to be created in the month of April, but only 266,000 were reported, which actually raised the unemployment rate to 6.1% since more than that figure entered the labor force. The disappointing report immediately called into question the government’s enhanced unemployment benefits that don’t expire until September, along with the nationwide childcare issues tied mostly to in-person and virtual schooling. While both are certainly holding back workers from joining the labor force, along with those workers who are still uncomfortable going back to work for health reasons, it is still nearly impossible to tell what is the overarching reason. What the report surely told the market is that these reasons don’t seem to be going away soon and the labor supply issues many are experiencing may linger. (Barron’s)
Quiz:
Quiz
How much is Dogecoin, the “joke” cryptocurrency created in 2013 with no intended use, worth now after a meteoric rise this year? (Scroll Down for Answer)
Answer below.
Have a Great Week!
Answer:
4. As of last Friday, Dogecoin is worth $81 billion. (Barron’s).