Telemus Weekly Market Review May 3rd - May 7th, 2021

May 3 – May 7 Week in Review

Markets trended sideways for much of the week, before an unusual Friday session helped drive gains for most major indices. The S&P 500 finished up 1.2%, the Dow Jones Industrial Average gained 2.7%, while the Russell 2000 index had more modest appreciation of 0.2%. The NASDAQ composite, which is composed of more growth oriented stocks, fell 1.5% in a week where value names led the way.

Economically sensitive sectors were the best performers on the week. Energy, which had lagged throughout April, reversed course advancing nearly 9%. Materials, financials and industrials also posted strong gains. Alternatively, consumer discretionary, utilities, real estate and technology all finished the week in the red.

The week’s excitement came on Friday when the Bureau of Labor Statistics announced April jobs data. In total, 266,000 jobs were added during the month. The unemployment rate ticked higher to 6.1%, up from 6.0% the month prior. April job gains fell well short of the roughly one million jobs that market was expecting. Despite this negative surprise, the market shrugged off the weak employment data to finish positive on Friday.

In other economic news, ISM manufacturing data pointed to a continued strong pace of activity in April, although it did decelerate from March. Across the pond, the Bank of England mirrored the Fed’s verbiage stating it does not intend to raise rates until there is clear evidence of an economic rebound. In a Federal Reserve report on financial stability, Fed Governor Lael Brainard warned that the combination of stretched equity valuations and high levels of corporate indebtedness bear watching.

This market appears confident enough in the economic outlook as expectations around risk and expected price volatility are on the decline. The CBOE Volatility Index, or VIX, fell back below a ready of 17. On Friday alone, the VIX declined over 9%.

The bond market finished slightly higher with the 2-year Treasury yield falling one basis point to 0.15%. The 10-year yield closed down 5 basis points to 1.58%. The rate on the 10-year had fallen to 1.47% shortly after Friday’s employment report, although it reverted back by the market close.

In other markets the U.S. Dollar continued its downward trend finishing at 90.23. The dollar had peak at a reading of just above 93 heading into April and has been on a steady decline since. WTI crude extended higher, rising 2.2% to finish at $64.90 a barrel. Having been range bound for much of the past three months, gold got a bid this week rising 3.9% to $1,837. This marked the biggest weekly increase in the price of gold since November.

May 10 – May 14 Economic Calendar