Before the Bell - In trading this morning, the futures are pointing to early solid increases as the second quarter begins. The U.S. Labor Department reported this morning that in the week ended March 27th, first-time jobless filings came to 719,000. That compared with a downwardly revised 657,000 layoffs reported the prior week and expectations of 675,000 for the latest seven-day stretch. Jobless claims have been trending lower for some weeks now, with just occasional interruptions, such as this past week.
This week’s last trading day, ahead of the observation of the Good Friday holiday, will have in the background speculation on specifics of President Biden's $2 trillion infrastructure plan, , and the tax changes that will accompany it, concerns about the employment report from the Labor Department due out tomorrow, and jitters about rising Treasury yields.
Yesterday was a solid day for equities, and for a change, it was the NASDAQ stocks that led the way. The main indexes all began the day on the plus side of the ledger, with the Dow Jones Industrial Average quickly ascending more than 100 points. Then, after a brief dip into the loss column by late in the morning, that composite would again press higher, albeit just modestly so, before falling back to session lows by the close. It was another story for the recently troubled NASDAQ, which would end the day near session highs in a rush back into tech stalwarts, such as Tesla (TSLA) and Amazon.com (AMZN).
Thus ended the first quarter of 2021, a volatile stretch in which growth and value stocks alternated in and out of favor with Wall Street, while Treasury yields rose sharply on nascent inflation fears. Regarding news yesterday, the higher Treasury yields continued to crimp housing with mortgage applications and pending home sales both declining. Yields are somewhat lower this morning and that should help stocks retain their early indicated gains.
While the stock market will be closed tomorrow in observance of Good Friday, the government will be open, with the monthly report on employment and unemployment due out. In that key issuance, job growth is expected to come in at 650,000 and the jobless rate is forecast to fall to 6.0%. Finally, ahead of this report and 30 minutes after the opening on Wall Street, the Institute for Supply Management is due to post its monthly survey on manufacturing activity. That index is forecast to rise to a strong 61.5 up from last month's 60.8. – Harvey S. Katz, CFA