Before the Bell - It has been a week of closely watched events. To recap:, on Tuesday, investor were consumed by the Georgia Senate races, which would alter the makeup and leadership of that chamber; then, on Wednesday, we would see the Electoral College vote tallied, which would affirm that Joseph R. Biden Jr. would be inaugurated as President of the United States on January 20th notwithstanding reprehensible and deadly violence in the Capitol, and this morning, the Labor Department has just reported on the job totals for December and the accompanying unemployment rate.
Regarding this latter report, Labor affirmed that the nation surprisingly had lost 140,000 jobs last month (forecasts had been for an increase of 50,000 jobs), while the jobless rate came in at a stable 6.7%. That was the first loss in payroll since April. In other aspects of this major issuance, we saw that the labor force participation rate declined to 61.5%, but average hourly earnings rose 0.8% in December. Regarding revisions, employment rose by 336,000 in November (versus the originally reported gain of 245,000). Overall, though, this was a disappointing report and suggests the economy is moving along in choppy fashion. As for the equity futures, they were up ahead of the data and they remain higher now, suggesting that the Street remains upbeat on prospects for greater fiscal stimulus.
All of this has followed a rather volatile week, which saw an initial selloff on Monday, a mixed showing on Tuesday, ahead of the Georgia vote, which would tip control of the U.S. Senate from the Republican Party to the Democratic Party, and outsized advances the past two days on relief that the transition of authority from the current President to President-Elect Biden would be orderly and peaceful. Solid economic metrics also figured in the strong mid-week performance on Wall Street.
With regard to the economy, the current week has brought good news on the industrial front, as the Institute for Supply Management reported on Tuesday that manufacturing activity had pushed up to more than a two-year high in December and yesterday the same ISM noted that non-manufacturing had increased from 55.9 in November to 57.2 in December, a relatively strong reading. The latest metric was above forecasts and suggested that the falloff in business growth in the just-ended quarter may not have been as severe as we expected earlier.
Turning to yesterday's market, stocks started the session on a positive note and went from there, with the Dow Jones Industrial Average pressing higher throughout the morning and reaching a gain of almost 300 points as we reached the noon hour in New York. The NASDAQ, which had sold off on Wednesday, led the way with stellar gains in big tech, including Apple (AAPL), Microsoft, and Tesla (TSLA). The gains would persist during the afternoon and when the session ended, the Dow would be up by more than 200 points and the NASDAQ would climb by better than 300 points. At the close, the Dow would reach 31,000 for the first time ever; the S&P 500 would top 3,800; and the NASDAQ would rise above 13,000--all records.
So, the indexes are at all-time highs as we close out the first full week of the new year. – Harvey S. Katz, CFA