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Afternoon Note

Flirting

By Charles Payne, CEO & Principal Analyst
5/8/2020 2:11 PM

The April job’s report was nothing short of devastating, with 20.5 million job losses and the unemployment rate rising 10.3% to 14.7%. The losses were across all the major work groups, and with the exception of Blacks, represented record highs for each.

Unemployment Rate

The impacts from the pandemic was widespread. The number of people temporarily laid off increased by almost 10 times to 18.063 million from 1.848 million. The number of permanent job losers increased by 544,000 to 2.0 million. Those people unemployed less than 5 weeks rose by 10.7 million to 14.3 million, representing approximately two-thirds of the unemployed, versus a decline of 225,000 to 939,000 for those who have been unemployed by 27 weeks or more.

Civilian Unemployment Rate

While leisure and hospitality plummeted by 7.7 million, or 47 percent, declines were broad based.

The labor force participation rate also dropped 2.5% to 60.2%, the lowest reading since January 1973 when it registered 60%.

Average hourly earnings for all private nonfarm payrolls increased by $1.34 to $30.01, reflecting in large part the substantial job loss among lower-paid workers, as this coupled with increases in earnings, caused upward pressure on the average hourly earnings estimates.

The average workweek increased by 0.1 hour to 34.2 hours. However in manufacturing, the workweek declined by 2.1 hours to 38.3 hours, and overtime declined by 0.9 hour to 2.1 hours.

Despite the astonishing number of job losses, the market is in full on rally mood, as more and more places reopen, and there is pent up demand to go out, get back to work and do things.  Case in point, Disney (DIS) opened its theme park in Shanghai at 30% capacity and same day tickets sold out within minutes.  Uber (UBER), who said they would no longer attain profitability this year, has seen traffic grow week over week for the last three weeks. 

The S&P 500 has been flirting with the major breakout point of 2,923.  If it can close above that, it would set up for a major leg higher.  

All 11 sectors are in the green. And you guessed it, Energy is the leader today. WTI is up 1.7% to $23.94, despite the release of the Baker Hughes report.  Active U.S. rigs drilling for oil declined for the 8th consecutive week, dropping by 33 rigs to 292, the lowest level since September 2009.  Total active U.S. rigs also declined by 34 to 374, which includes natural gas rigs, and is the lowest level on record. Rigs have been idle the past couple of months. And as we discussed yesterday, we could see demand pick up before rigs are up and running.  WTI is still down about 60% this year.

S&P 500 Index

+1.35%

Communication Services (XLC)

+1.82%

Consumer Discretionary (XLY)

+1.56%

Consumer Staples (XLP)

+2.02%

Energy (XLE)

+2.78%

Financials (XLF)

+1.70%

Health Care (XLV)

+0.73%

Industrials (XLI)

+2.00%

Materials (XLB)

+1.99%

Real Estate (XLRE)

+1.34%

Technology (XLK)

+1.3%

Utilities (XLU)

+1.29%

Advancers far outpace decliners and breadth is overwhelmingly positive.  But a real standout is the number of stocks hitting a 52-week high.   

Issues:

NYSE

NASDAQ

Advancing

2,454

2,504

Declining

481

656

52 Week High

28

80

52 Week Low

4

8

Advancing

2.06B

1.72B

Declining

348.95M

420.72M

 

It’s been another good week for the markets.  The Nasdaq is on pace for its 5 consecutive up day. 

Have a great weekend, be safe, be well, and Happy Mother’s Day to all the moms.


 

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