Markets “In a Nutshell” for June 8, 2021
Investment Week at a Glance
Stocks finished higher for the week. The Dow Jones Industrial Average rose 0.70%, the S&P 500 was up 0.60%, and the NASDAQ rose 0.50%. Foreign stocks (MSCI EAFE) were up as well, rising 0.70%. Bond prices were unchanged for the week, with the 10-year U.S. Treasury ending the week at 1.55%. (Data source: Wall Street Journal)
The Economic Recovery Continues
The economic recovery remained front and center, as the monthly non-farm payrolls report was released on Friday. The Labor Department reported that 559,000 jobs were added in the month of May, which was less than the forecasts of 650,000. In addition, the labor force participation rate fell from 61.7% to 61.6%.
The positive news for the month was the employment-to-population ratio, which some believe is the most important ratio, rose, and the unemployed rate fell to 5.8%. There was also an increase in average hourly earnings, rising 0.5%, which can be seen as a sign of a tight labor market.
Despite the jobs report sending mixed signals, stocks continued their upward trend while long term bonds lost some ground. This suggests that the overall market expects this jobs report will give the Federal Reserve some additional breathing room to keep its monetary policy extremely accommodative.
Last week, Vice Chair Randal Quarles and Fed Governor Lael Brainard both commented that significant hurdles remained in the economy and that the Federal Reserve was far from achieving its employment and inflation targets. They also spoke on the most recent increase in inflation and stated that the Federal Reserve would be quick to act in the event that it becomes a prolonged issue.
From March to April of this year we’ve seen inflation soar from 2.6% up to 4.2%. Since 1913, what has been the average rate of inflation? (Scroll Down for Answer)
Have a Great Week!
b. 3.10% is the average rate of inflation since the government began tracking in 1913.