FED Gives S$P500 and Stock Market More Time to Rally After US May Jobs Report
The stock markets are loving the large amounts of cash that has been thrown from governments and central banks. They have been running higher since March last year, after the initial coronavirus crash. There have been a few pullbacks, but nothing important to ruin the momentum.
Moving averages have been doing a great job in providing support during pullbacks like the 50 SMA (yellow) and the 100 SMA (green) on the S&P500 daily chart below. or just pushing the price higher, like the 20 SMA (gray).
Moving averages keep pushing S&P higher
The FED money in particular has been helping S&P500 and the stock markets in general, although with the improving data from the US rummours about the FED tapering the stimulus programme at some point in the near future increased. It seems like the US economy has is in the middle of a boom, since all the economic indicators have been increasing to multi-decade highs, as well as inflation.
But, Friday’s non-farm job report fell short of expectations and despite a great number, markets weren’t satisfied and the USD reversed, while stock markets finished the week at the highs. Expectations were for a higher new jobs number after the reopening in certain states. Below is the report:
Non-farm payrolls report highlights for May 2021:
- May US non-farm payrolls +559K vs +675K expected
- April jobless claims were 266K (revised to 278K)
- Unemployment rate 5.8% vs 5.9% expected
- Prior unemployment rate 6.1%
- Participation rate 61.6% vs 61.8% expected (was 62.8% pre-pandemic)
- Prior participation rate 61.7%
- Underemployment rate 10.2% vs 10.4% prior
- Average hourly earnings +0.5% m/m vs +0.2% expected
- Average hourly earnings +2.0% y/y vs +1.6% expected
- Average weekly hours 34.9 vs 34.9 expected
- Two month net revision +27K
- Change in private payrolls +492K vs +610K expected
- Change in manufacturing payrolls +23K vs +25K expected
- Long-term unemployed at 3.8m vs 4.2m prior
- The employment-population ratio, at 58.0% vs 57.9% prior (61% before pandemic)
- Full report
Mester Interview on CNBC
- It was a solid employment report but wants to see further progress
- Notes that the participation rate has only made it halfway back
- ‘Substantial further progress’ doesn’t mean getting all the way back to pre-pandemic
- Says she’s focused on prime age workforce participation because of acceleration of retirement during pandemic
- We want to be deliberately patient on tapering
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