Jobs Growth Ticks Higher | Daily Market Update

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Friday, March 5, 2021

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Jobs Growth Ticks Higher

The US economy gained 379,000 jobs in February according to the US Bureau of Labor Statistics, exceeding Bloomberg survey estimates of a 200,000 gain, aided by seasonal adjustments and paired with strong revisions to January numbers. The unemployment rate fell 0.1% to 6.2% and was paired with an unchanged labor force participation rate. We take a closer look at the state of the US labor market in today’s LPL Research blog, available at 12pm ET.

Daily Insights

Stocks surge after jobs release shows improvement in the labor market is better than expected

  • US stocks opened little changed after the Nasdaq 100 continued to lead markets lower on Thursday.
  • West Texas Intermediate (WTI) crude oil prices surpass $65/barrel after OPEC+ declined to adjust production output.
  • European markets little changed, with the United Kingdom outperforming.
  • Asian stocks dipped overnight but finished well off the lows.

Federal Reserve (Fed) reiterates dovish stance amid advance in Treasury yields

  • Taking notice of the rise in yields, Federal Reserve Chair Jerome Powell added he would be concerned with disorderly markets or a tightening of financial conditions that would threaten the path of the recovery.
  • Despite comments indicating the Fed is a long way from pulling support from the economy, markets seemed disappointed by the lack of details of how the Fed might manage the rise in long-term rates.
  • Chairman Powell also failed to comment on the possible resurrection of “operation twist”—where the Fed would lighten its holdings of short-term bonds to purchase longer-dated securities.

Technical update

  • A second straight day of the 10-year Treasury yield rising 8 basis points finally pushed the S&P 500 Index below its closely watched 50-day moving average. However, more than half the stocks in the S&P 500 remain above their 50-day moving average, a sign that markets are not yet oversold.
  • The Nasdaq 100 is now 9.7% off its closing highs and firmly in correction territory using intraday levels.

COVID-19 news

The United States reported 65,000 new COVID-19 cases on Thursday, down 16% week over week, though the overall trend decline has slowed since early February (source: Johns Hopkins).

  • Primary concern continues to be the impact of B117 COVID variant, which is estimated to account for about 20% of new US cases
  • Daily administered vaccine doses in the US have now surpassed 2 million
  • Cases in Western Europe have continued to eek higher, although Spain remains the outlier that sees cases declining

LPL Research in the Media

LPL Financial Chief Market Strategist Ryan Detrick was recently quoted in Bloomberg and the Associated Press.

Yield spike spooks stock investors

In this week’s Market Signals podcast and video, LPL Research discusses soaring yields last week and examines the recent record breaking earnings season, plus updates from the Federal Reserve.

 

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