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Stock Markets Reach New Highs on Strong Jobs Report Thumbnail

Stock Markets Reach New Highs on Strong Jobs Report

The Dow (+1.1%), NASDAQ (+2.0%) and S&P 500 (+1.7%) all had strong weeks, as each of the three main US market indices reached new all-time highs. Last Wednesday also closed out the first half of 2021, and certainly with no disappointment as each of the three indices have gained 14% or more YTD. Heck, that’s a good year, no less the first half of the year. In fact, all 11 sectors of the S&P 500 are positive this year, with the energy sector leading the way at a gain of 45.6%.

Meanwhile, taxable bonds and tax-free municipal bonds were flat to up slightly for the week. Year-to-date, taxable bonds remain down about 1% - 2%, but have recovered more than half of their losses seen in late Q1. Conversely, tax-free municipal bonds have enjoyed a roughly 2% - 3% gain so far this year.

All eyes were on the June jobs numbers that were reported last week, and they showed the economy gained 850,000 new jobs, compared to most economists’ expectations of about 700,000 new jobs. This economic report is just another in a string of strong economic reports we have seen over the past few months, leaving the largest unknown and biggest concern as being inflation. The government has stated they believe the currently high inflation is temporary, while other economists are concerned that it may not be temporary. If inflation persists, the Fed may be forced to begin taking steps to combat inflation. Those measures would likely result in a rise in interest rates, which could have an adverse impact on both the stock and bond markets. As always, time will tell.

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