Medicare Agent News: Jobs Report On Deck

Thursday, May 6, 2021

Jobs Report On Deck

By Nicholas Jasinski | Thursday, May 6

Late Bloomer. An afternoon rally pushed major stock indexes into positive territory today, as the parade of earnings marched on and investors held their breath ahead of Friday's April jobs report. The Dow Jones Industrial Average managed a 0.9% gain to set a record high, while the S&P 500 added 0.8% and the Nasdaq Composite rose 0.4%.

Value sectors generally outperformed their growth counterparts this morning -- as has been the prevailing theme this week -- but a late-day rebound put technology and communication services neck and neck with the likes of financials. Defensive groups like consumer staples and utilities held their own as well, and all 11 sectors of the S&P 500 were in positive territory by the day's close.

In aggregate, companies continue to handily surpass Wall Street's expectations, and the market continues to take that in stride. Stocks have rallied consistently for months—to lofty valuations—on the expectation that earnings would catch up as the Covid-19 pandemic receded and the economy improved.

First-quarter earnings season has justified that thesis for now, and merely provided confirmation for past gains—rather than justification for future ones.

Investors and economists will get their latest look at the health of the U.S. economic rebound tomorrow morning, with the release of April jobs numbers. The consensus expectation, according to FactSet, is that nonfarm payrolls jumped by 975,000 last month, as the unemployment rate ticked down 0.2 percentage points, to 5.8%. That would compare with a 3.5% unemployment rate in February 2020, before the Covid-19 pandemic hit the U.S. labor market. By April of last year, unemployment had spiked to 14.7%.

Barron's Matthew C. Klein previewed tomorrow's report, and he sees plenty of reasons to bet the over on jobs, and the under on the unemployment rate. He writes:

For one thing, more Americans are getting vaccinated, with almost 60% of adults already having had at least one dose. That’s powering an organic return to normalcy showing up in everything from sports attendance to movie tickets and restaurant receipts.

At the same time, consumers have gotten a windfall of hundreds of billions of dollars thanks to the American Rescue Plan—and while much of that windfall was saved or used to pump up the prices of houses and stocks, a lot of it is being spent on goods and services that directly support jobs and incomes. That money hadn’t yet been disbursed at the time the March jobs data were being collected.

The combination of shots and checks should be potent, which is why most economists are penciling in gains of about 1 million jobs in April, but there are a few things to keep an eye on when tracking this unusual recovery.

Matt says to pay particular attention to employment at restaurants and bars in April, given their disproportionate share of job losses during the pandemic. And because employment in the industry closely matches spending, it will also be a good indicator of just how willing American consumers were in April to get out and start enjoying their post-vaccine lives.

Read the rest of Matt's report here.