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US weekly: Declining Covid cases, macro data pushes markets to near record high

US weekly: Declining Covid cases, macro data pushes markets to near record high

Last updated: 05 Jun, 2021 | 08:27 am

US weekly: Declining Covid cases, macro data pushes markets to near record high

The markets were closed on Monday, (May 31st) in observance of Memorial Day. The week’s trading started off on a good note on Tuesday, as investors were optimistic about the economic reopening, but inflation concerns capped gains. Investors began the first week of June on a strong note as Covid cases continued to decline and vaccinations rose. More than half the population in the US has received at least one dose.

The S&P 500 index continued its mild rise on Wednesday, after Manufacturing PMI rose to 61.2, beating expectations of 60.7. Investors were also still digesting the development related to Joe Biden’s plan to put a ban on companies with investments linked to China’s military. The index saw a mild correction on Thursday, led by news around the Corporate Tax hike. US stocks closed higher on Friday, after the May nonfarm-payrolls report showed a less-than-expected gain, leading investors to bet that the Federal Reserve will continue with its easy monetary policy. For the week, S&P 500 ended 0.7% higher to 34,757.  

Weekly US market stats with IND

Let’s see the major developments during the week:

Robust macro data: The Manufacturing PMI rose to 61.2, an increase of 0.5 percentage point from the April reading of 60.7 percent. The US economy has now been in an expansion mode for the 12th month in a row after a contraction in April 2020. The New Orders Index registered 67%, increasing 2.7% points from the April reading of 64.3%. 

Jobs data mixed: The investors were closely tracking data related to nonfarm payrolls report. The Labor Department reported that employers added 559,000 jobs in May (nonfarm), below the consensus forecasts of around 650,000, while the labor force participation rate ticked down to 61.6% from 61.7%. On the positive side, the unemployment rate fell more than expected, from 6.1% to 5.8%. Payroll processing firm ADP reported that its tally of private-sector jobs increased by 978,000 in May, well above consensus expectations of 650,000. Overall jobs data gave out mixed signals in the week.

US Treasury yields ease: After increasing early in the week, the yield on the benchmark 10-year U.S. Treasury note fell back on Friday following the May payrolls report, as investors seemed to bet that the Fed would continue with its accommodative policy for longer. (Bond prices and yields move in opposite directions.). Investment-grade corporate bonds experienced relatively light trading volumes, and new issuance was in line with expectations.

Oil prices move higher: Crude oil prices soared to a 2-year high with Brent crude rising above the $71 per barrel mark on Wednesday. Oil prices are on the rise after key oil-producing countries announced that they would adhere to plans relating to a gradual increase in crude oil production. Oil ended the week 4.7% higher at $69.43 per barrel.

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