Friends
Today we saw a bit of bad news is good news as this morning’s non-farm payroll number came in lighter than expected. 175,000 new jobs were created in April vs. the expected 240,000 new jobs. The unemployment rate also ticked up to 3.9% instead of the 3.8% expected by analysts. So, the narrative is that a weakening jobs picture helps mute inflation pressures, which in turn might give the Fed the availability to begin to lower interest rates at some point this year. Yes, I know that it’s only one number and we did actually still have employment growth, but the markets liked the muted number and stocks moved smartly higher.
For the day, the Dow Jones Industrial Average was up 450 points to finish the day at 38,675. The S&P 500 was up 63 points to close at 5,127. The Nasdaq Composite Index was up 315 points to close at 16,156. Gold was down $1 to trade at $2,308 per ounce, while oil was down $.88 to trade at $78.07 per barrel WTI.
It certainly has been a period of shifting narratives in recent weeks. At one moment it looks like stocks are in trouble and the next minute it looks like the coast is clear. The reality probably lies somewhere in between. Inflation still is not totally tamed, but the Fed seems to continue to believe that it will be. So, as long as you have the possibility of the Fed moving to a more accommodating monetary policy, stocks are likely to stay constructive. Of course, as I just said, the narrative seems to change almost daily. In the meantime…
Have a great weekend everyone.
