Before The Bell
Stock futures are pointing to a mixed-to-higher opening following the release of better-than-expected employment data. The Labor Department reported this morning that the nation added a healthy 943,000 jobs in July.
Lately, stocks have benefited from a big run up in corporate earnings, even as the economic data has not been uniformly upbeat. Many of the large-capitalization companies have been topping expectations by a wide margin, and the thinking is that more good news is on the way.
But elevated stock-price levels mean that it does not take all that much for volatility to take hold and prompt periodic bouts of profit-taking. Concerns about the persistence of rising inflation and the spread of the Delta variant are causing some hand-wringing.
So far, the bond market has shrugged off worries that inflation might prove more stubborn than in the recent past. The yield on the benchmark 10-year Treasury note is near its lowest point for the past six months, providing a level of assurance to some that rising prices won’t hamper the economy for any length of time.
A sustained pickup in inflation could still become a problem, though, and push the Federal Reserve to take corrective action by reducing supportive measures. That is not a scenario Wall Street wants to see materialize.
The other worry these days is that the spread of the Delta variant will force renewed restrictions on travel and public interaction, taking steam out of the recovery in the process.
To date, the problems caused by the Delta variant have not proven so big as to cause widespread shutdowns and, in fact, have provided the central bank with a reason not to pull back its aggressive stimulus measures
A “glass-half-full” sentiment marked trading in the major stock market averages on Thursday, with the Dow Jones Industrial Average climbing 272 points; the S&P 500 adding 26 points; and the NASDAQ gaining 115 points. The S&P 500 and the NASDAQ closed at record highs. Small-cap stocks also fared well, with the Russell 2000 Index gaining 40 points. Market breath was strong, with advancers topping declining issues by a wide margin and most stock market sectors rising.
With earnings season winding down, the focus is sure to soon turn to the Federal Reserve’s annual summit at month’s end in Jackson Hole, Wyoming. Certain Fed officials have been signaling that the time to pull back on the central bank’s hefty monthly securities purchases is approaching. Their goal is to provide ample advance notice so as to avoid market disruption and have investors take any such moves in stride.
– Robert Mitkowski
At the time of this writing, the author did not have positions in any of the companies mentioned in this article.
