Company / Analytics

Week 26 in Brief

North America

U.S. stocks rose for a second straight week with all three benchmark indexes at a fresh all-time high, after the June employment report beat estimates, signaling continued economic recovery.

How did the major indices perform?

• In the US, the Dow Jones Industrial Average rose 152.82 points, or 0.4%, to 34,786.35 for a record close, its first since May 7th.
• The S&P 500 advanced 32.40 points, or 0.8%, to 4352.34, closing at a fresh all-time high, and its 7th consecutive record high, a winning streak not seen since 1997.
• The Nasdaq Composite climbed 116.95 points, or 0.8%, to a record 14,639.33.
• For the week, the Dow, S&P 500, and Nasdaq all climbed for a second straight week. The Dow rose 1% this week, while the S&P 500 gained 1.7% and the Nasdaq climbed 1.9%.

What drove the market?

• Better-than-expected Employment Data: The U.S. added 850,000 jobs in June, marking the biggest monthly gain since March, and jobs gains in May were raised slightly to 583,0000 from 559,000. Economists polled by The Wall Street Journal had estimated that the U.S. added 706,000 new jobs for June.
• While very strong gains in hospitality and leisure, areas most affected by the pandemic, signal that a full recovery is possible, progress in the labor market isn’t strong enough to stoke investor fears that the Federal Reserve will have to begin tapering its quantitative easing program or raising rates faster than anticipated. Even with the healthy pace” of recovery from the COVID-19 crisis, the job market still has “a lot of spare capacity.
• Unemployment rose to 5.9% in June from 5.8% in May, mostly due to the return of workers to the labor force. Employers are yet to find enough people to fulfill the increasingly, and historically, large job openings.
• The ratio of job openings/unemployed is nearing pre-pandemic highs, and the ratio of quits/layoffs has vaulted to multi-decade highs. The U.S. average hourly earnings climbed 10 cents in June to $30.40, and the U.S. workweek fell 0.1 hours to 34.7 hours last month, the jobs report shows.
• International Trade Data: A report on international trade in goods and services for May showed a deficit of $72.1 billion expected, slightly higher than had been expected and higher than the $68.9 billion deficit in April. A reading on factory orders for May showed a 1.7% rise, after a revised 0.1% decline in the prior month, the Commerce Department said Friday, a little better than expectations. Factory orders have risen in 12 of the last 13 months.
• Oil Market: The oil market was also in focus on Friday as the Organization of the Petroleum Exporting Countries and Russia— members of the group known as OPEC+— again delayed a decision about easing output curbs that have been in place to help stabilize crude prices. OPEC+ group is trying to balance the aftereffects of the COVID pandemic on energy demand and concerns about the impact of variants of the coronavirus in parts of the world against expectations for higher demand as many economies emerge from lockdowns and stay-at-home protocols put in place to limit the pandemic’s spread.

Which stocks were in focus Friday?

• Shares of International Business Machines (IBM) fell 4.6% on news that President Jim Whitehurst is stepping down after three years at the tech giant, coming after CEO Arvind Krishna took the reins at the company last year.
• A Boeing cargo plane made an emergency landing in the Pacific Ocean off the coast of Hawaii early Friday and both people on board have been rescued, the Federal Aviation Administration said in a statement. Its stock declined 1.3%.
• Shares of Chinese ride-sharing company Didi Global Inc. dropped 5.3% after China’s internet regulator said it is investigating the company’s cybersecurity risks, Dow Jones Newswires reported.
• Tesla announced Friday that it produced 206,421 vehicles and delivered 201,250, just below FactSet expectations for 207,000 vehicle sales. Shares rose 0.1%.
• Shares of Virgin Galactic climbed about 4.1% after the space tourism venture announced it will take Sir Richard Branson, one of its founders, into space.
• Shares of donut chain Krispy Kreme dropped about 9% after the company closed its first trading day up 24%.
• Brokerage firm Robinhood Markets made public its plans to list on the Nasdaq Inc. exchange under the ticker “HOOD.”

How did the European markets perform?

• European shares ended slightly higher on Friday on a boost from chipmakers, although gains were capped by weak bank stocks and growing concerns over the Delta variant of the coronavirus.
• The pan-European STOXX 600 index rose 0.3% to close at 456.81 points, with technology stocks rising 1.1%.
• Bank stocks fell 1.3% and were the worst performers but remained the best performing eurozone sector so far this year, as rising inflation expectations had pushed borrowing costs higher earlier in the year.
• In economic data, eurozone producer prices gathered pace in May on the back of rising energy prices, Eurostat revealed on Friday. Factory gate prices across the 19-member common currency bloc rose 1.3% month-on-month and 9.6% year-on-year.
• Semiconductor maker ASML Holding NV rose 1.4% after Micron Technology Inc said it plans to start using ASML EUV machines in production in 2024, while ASM International NV rose nearly 2.5% as it forecast higher order intake in the second quarter.
• Travel and leisure rose 1.6% but lost 1.4% through the week as virus-related curbs on the UK hit sentiment.
• Among other stocks, France’s SMCP fell 0.4%, after the company along with Zara owner Inditex were the subject of an investigation of suspicions of concealing “crimes against humanity” in China’s Xinjiang region, according to a judicial source.
• Volkswagen AG rose 0.2% after its U.S. arm said it sold more than 211,000 cars in the first half of 2021, its highest level for the period in nearly 50 years.
• British food delivery firm Deliveroo rose 6.7% to the top of the Stoxx 600 after agreeing to extend a partnership with French supermarket group Casino for two years.
• At the bottom of the European blue-chip index, Danish hospital equipment manufacturer Ambu plunged 9.2% after revising down its full-year profit guidance.

How did Asian markets perform?

Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 1.14%, while the Nikkei 225 led the Hang Seng lower. They fell 2.07% and 0.27% respectively.

Commodities and other assets

• The U.S. oil benchmark fell 0.1% to close at $75.16 a barrel as investors awaited a delayed decision by OPEC+ on whether to further boost production beginning next month.
• Gold futures settled 0.4% higher at $1,783.30 an ounce.
• The yield on the 10-year Treasury note slipped 4.5 basis points to 1.434%. Yields and debt prices move in opposite directions.

Currencies

• The dollar dropped from a three-month high earlier on Friday, weighed down by what analysts viewed as a mixed U.S. nonfarm payrolls report for June, that showed a strong headline number but with some weak components.
• The ICE U.S. Dollar Index, a measure of the currency against a basket of six major rivals, was down 0.4%.
• The euro was up 0.1% on the day at $1.1851.
• Against the yen, the dollar slid 0.5% to 111.04 yen, after earlier hitting a 15-month peak.

Next Week

• US markets are closed on Monday in observance of Independence Day, which falls on Sunday.
• Amazon founder Jeff Bezos steps into the Executive Chairman role, and Andy Passy takes over as CEO.
• A range of economic data including China’s Caixin Services PMI, European Markit Services PMI, the US Markit Services, and Composite PMI are expected. These should offer more details on the pace of the economic recovery in these regions.
• Watch out for our Monday Weekly Market Outlook that provides insights on what’s coming up that week.