Yesterday was an interesting session that saw buyers emerge into the closing bell, which is a surprise as we head into the June jobs report. The move was impressive, but the volume was 50% below the daily average. Of course, some of that’s from folks getting an early start on the Fourth of July holiday weekend. But aside from the low volume, market breadth was better.

Russell 2000	S&P 500	NASDAQ
+0.81%	+0.52%	+0.13%

Market Breadth	NYSE	NASDAQ
Advancing	2,149	2,473
Declining	1,148	1,869
52 Week High	219	138
52 Week Low	10	33
Up Volume	2.27B	2.27B
Down Volume	1.43B	1.94B

Pretty Picture

Energy (XLE) rocked, and Utilities (XLU) had a strong day, and the only losing sector was Consumer Staples (XLP), which have been waffling for some time and slipped after General Mills (GIS) results from this week.

On an individual basis, more names are trading above their 50-day moving average, but it’s still a long way down from the 70% peak in June. The S&P 500 is up six straight days, and the record is eight, but there will have to be stronger individual stock performance.

 

Manufacturing

The Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) edged lower but remained well into the expansion. 

• New orders: 66.0 from 67.0
• Productivity: 60.8 from 58.5
• Employment: 49.9 from 50.9
• Price 92.2 from 88.0 (has increased 13 straight months, but it’s getting even faster – highest since July 1979)

Commodities Up in Price: Acrylonitrile Butadiene Styrene (ABS); Aluminum (13); Aluminum Products (3); Brass (2); Caustic Soda; Coatings (3); Copper (13); Copper Products (4); Copper Wire; Corn (2); Corrugate (9); Corrugated Packaging (8); Crude Oil; Diesel Fuel (6); Electric Motors; Electrical Components (7); Electronic Assemblies; Electronic Components (7); Epoxy Resin (2); Foam Products (4); Freight (8); High-Density Polyethylene (HDPE) (6); Labor — Temporary (2); Lubricants (3); Lumber (12); Maintenance Repair Operations (MRO) Items; Ocean Freight (7); Packaging Supplies (7); Paper (2); Plastic Resins (10); Polyethylene (5); Polypropylene (12); Polyvinyl Chloride (PVC) Products; Precious Metals (3); Resin-Based Products (5); Rubber Products (5); Semiconductors (5); Soybean Products (9); Steel (11); Steel — Carbon (7); Steel — Cold Rolled (10); Steel — Galvanized (2); Steel — Hot Rolled (10); Steel — Plate; Steel — Scrap (2); Steel — Sheet; Steel — Stainless (8); Steel Products (10); Wood; Wood Pallets (7); and Wood Products.

Commodities Down in Price: Acetone (2).

Commodities in Short Supply: Aluminum (3); Aluminum Products (2); Caustic Soda; Corrugate; Electrical Components (9); Electronic Components (7); Epoxy; Fasteners; Foam Products (4); Labor — Temporary (2); Ocean Freight (3); Packaging Supplies; Paper; Plastic Products (5); Plastic Resins — Other (4); Polyvinyl Chloride (PVC) Resin (2); Printed Circuit Board (PCB) Components; Printed Circuit Boards (2); Semiconductors (7); Steel (7); Steel — Cold Rolled (2); Steel — Hot Rolled (8); Steel — Stainless (4); Steel Containers; Steel Products (5); and Wood — Pallets (3).

Note: The number of consecutive months the commodity is listed is indicated after each item.

Portfolio Approach

There were no changes to our Hotline Model Portfolio.

Today’s Session

Both the Congressional Budget Office and International Monetary Fund dramatically increased US GDP estimates for this year and next.

US GDP Estimates	2021	2022	2023
CBO	7.4%	3.1%	1.1%
IMF*	7.0%	6.4%	1.9%

*Assumes Biden infrastructure and social spending bills are enacted

Breaking News

June Jobs Report Beats Consensus but Disappointing

• 850,000 total jobs
• 662,000 private sectors (so-so)
• 5.9% U3 unemployment rate (higher)
• +151,000 labor force (weak)
• -18,000 Employed Household Survey
• Hourly wages $30.40 from $30.30
• Hours worked declined

Should have been much better.

The biggest miss was with the unemployment rate,  which was expected to decrease to 5.6%, instead it rose to 5.9%, and wage growth seems disconnected from all the stories of higher wages and massive bonuses to get workers off the sidelines.

There is still a long way to go to get back to pre-pandemic levels in every category, including 6.8 million fewer employed.

Jobs Picture	Jun 2021	Feb 2020
Participation	61.6	63.3
Unemployment Rate	5.9%	3.5%
Employment to Population	58.0%	61.1%
Total Payrolls	145,759,000	152,523,000

Comments

That is disappointing. It’s almost like some government worker spilled a cup of coffee, shuffled a few papers, and picked the wrong paper up. Mmm… Market doesn’t like it either. Raymond L Brown on 7/2/2021 11:33:12 AM

I want to wish you a belated Happy Independence Day to you, all whom you served with, those before you and after you. Be well Charles christopher voccola on 7/6/2021 9:44:32 AM

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