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SWS Daily Report - July 2, 2021


Overview

The major stock indices rose on Friday after a strong employment report that exceeded expectations in terms of jobs created. The fact that the unemployment rate increased by 0.1% seemed to provide reassurance that the Fed will not need to increase interest rates earlier than planned. The implication is that the economy continues to recover at a rapid rate. Investors appear confident that second quarter earnings will be very strong to support the high stock valuations. The SPX closed at a new all time high for the seventh straight day, a streak that has not occurred in over two decades. For the week, the SPX was up 1.7%, Dow up 1.0% and Nasdaq up 1.9%. Stocks in technology, communications and consumer discretionary were particularly strong this week.


Economy

There were 850,000 jobs added in June according to a report from the Bureau of Labor Statistics. This was much higher than the estimates which tended to range 710-720,000. The value for May was 559,000. Labor force participation rate continue to be stable at 61.6%. Most jobs were created in service industries such as leisure and hospitality.

The number of unemployed was essentially stable 9.5 million.

The unemployment rate came in at 5.9% for June compared with 5.8% in May. The predicted rate by economists was 5.6%


Before the pandemic in February 2020, the unemployment rate was 3.5%, the labor force participation rate was 63.3% and the number unemployed was 5.7 million. There were 22.3 million laid off in March and April of 2020 and 15.6 million have been regained. Total employment remains 7.13 million below the value in February 2020.

Wages increased by 0.3% for the month of June, 3.6% year over year.


The US trade deficit in May was 71.2 billion, up 2.2 billion from April. Exports were up 1.3 billion from April but there were also 3.5 billion more imports. Year to date the deficit was up 45.8% from the same period in 2020 with exports increasing 11.4$ and imports increasing 18.7%.

US factory orders jumped in May by 1.7% after falling 0.1% in April. The estimate was 1.6%. Orders were up 17.2% year on year. Transportation goods were up 7.7%.


Manufacturing accounts for 11.9% of GDP. Core capital goods, used to calculate business equipment spending in the calculation of GDP, were up 1.1% compared with 0.9% in April.


Markets

The SP 500 is up by 0.75% to close at 4352.34. The index is up 1.67% over five days, up 2.89% over one month, up 8.27% over three months and up 39.05% over one year.

The trailing P/E is 37.26 compared with 27.21 one year ago and estimated future P/E 22.52. Dividend yield is currently 1.35 compared with 2.01 one year ago.

Leading stocks were PAYC up 2.92%, ORCL up 2.84%, HLT up 2.74%, KMX up 2.39% and FTNT up 2.35%.

Trailing stocks were IBM down 4.58%, MRO down 2.40%, DVN down 2.37%, PENN down 2.19% and APA down 2.05%.


The Dow Jones industrial Average was up 0.44% to close at 34786.35. The DOW is up 1.02% over five days, up 0.09% over one month, up 4.93% over three months and up 34.69% over one year.

The trailing P/E is 29.29 compared with 21.95 year ago and an estimated future P/E of 20.12. The current dividend yield is 1.81% compared with 2.55 one year ago.

Leading stocks were MSFT up 2.23%, AAPL up 1.96%, JNJ up 1.82%, V up 1.48% and INTL up 1.34%.

Trailing stocks were IBM down 4.64%, BA down 1.27%, WBA down 1.11%, TRV down 0.40%, and GS down 0.22%.


The NASDAQ composite is up 0.81% and closed at 14639.33. NASDAQ has been up 1.94% over five days, up 5.97% over one month, up 8.60% over 3 months and up 43.42% over one year.

Leading stocks were SQBG up 89.16%, ALEC up 57.12%, BLIN up 56.00%, TATT up 42.62% and MRIN up 34.55%.

Trailing stocks were ITRM down 37.99%, ARWR down 25.69%, PBTS down 19.28%, ATHE down 18.22%, and CTXR down 17.31%.


The MidCap SP400 dropped by 0.27% to close at 2709.57. The SP400 is down 0.62% for the past 5 days, down 0.70% for the past month, up 2.34% for the past 3 months and up 52.31% over the past year.

Leading stocks were ATGE up 7.90%, NCR up 3.05% and CNXC up 2.79%.

Trailing stocks were ARWR down 25.69%, COTY down 4.51% and STAA down 4.27%


The SmallCap SP600 dropped by 1.02% to close at 1369.68. The SP600 is down 1.37% for the past 5 days, down 1.02% for the past month, up 2.19% for the past 3 months and up 66.23% over the past year.

Leading stocks were BNED up 15.89%, SHEN up 15.47% and IIIN up 8.76%.

Trailing stocks were ENDP down 9.58%, VSTO down 8.44% and TISI down 7.23%.


The CBOE VIX is down 2.65% and closed at 15.07. The VIX is down 3.52% over five days, down 8.22% over one month, down 13.04% over three months and down 45.56% over one year.


On the New York stock exchange 1680 stocks advanced and 1600 declined, while on Nasdaq 1724 advanced and 2556 declined.

There were 203 new 52 week highs and 16 new 52 week lows on NYSE with 133 new highs and 43 new lows on NASDAQ.


The 2 year Treasury note yield is 0.244% and 10 year is 1.437%. The 10 year yield was down 9.1% over five days, down 11.7% over one month, down 28.3% three months ago, and up 76.4% one year ago.


SP500 Sector Performance % change

Information Technology + 1.39

Consumer Discretionary + 1.08

Communication Services + 0.92

Health Care + 0.86

Real Estate + 0.52

Consumer Staples + 0.31

Industrials + 0.18

Materials + 0.08

Utilities + 0.08

Energy - 0.20

Financials - 0.20


Information Technology has been down 3.24% over five days, up 7.23% over one month, up 10.64% over three months and up 42.24% over one year.

Financials has been down 0.11% over five days, down 3.71% over one month, up 7.17% over three months and up 60.86% over one year.


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