Markets Continue 5-Week Rally on Positive Economic News

Stock markets continued their 5-week rally last week, as the Dow (+1.4%), NASDAQ (+3.1%) and S&P 500 (+2.0%) also set new record highs.  Plus, small caps surged 6% in a spectacular week for that asset class.  Taxable and tax-free municipal bonds also rallied last week, as they each gained about 0.5%.  What a great week for balanced portfolios.

Last week was full of positive economic news.  Initial and continuing unemployment claims continued to go down, as the unemployment rate dropped to 4.6%.  The October jobs report showed an addition of 531,000 jobs, well in excess of expectations.  Unit labor costs also jumped 8.8% in the 3rd quarter, as salaries and wages grew by the most on record.  Some pundits, however, fear the wage growth could squeeze corporate profits and/or cause inflationary pressure. In more good news, Pfizer announced a therapeutic pill that can be used to treat COVID-infected victims.  Lastly, Congress approved the $1 trillion infrastructure bill Friday night, and it apparently won’t be accompanied with increased taxes.  This was a load of good news that caused a continued rally of the markets last week, and also a jump in the markets to start this week.

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