The stock market closed out the week higher, with the S&P (SP500) and Dow (DJI) ending at record highs as the strong jobs report buoyed reflation plays.
The Labor Department jobs report Friday showed the U.S. economy added 943,000 jobs in July. Economists expected 845,000 new jobs last month, according to Dow Jones estimates. The unemployment rate dropped to 5.4%, below the expectation of 5.7%.
“You saw a lot more jobs being created in those areas that are reopening — restaurants, hotels, logistics, transportation,” Raymond James Chief Investment Officer Larry Adam said. “That’s a good sign. I think that puts more spending power behind the consumer going forward and I think that that’s ultimately a good thing for the economy.”
The financial sector led gains Friday as rates edged up, increasing banks’ profitability prospects. Industrials, retailers and energy stocks also moved higher as the strong jobs report eased concerns about the economic recovery.
Economic indicators this week:
Investors are awaiting key inflation data scheduled for release this week. The consumer price index and the producer price index are scheduled to come out Wednesday and Thursday, respectively.
Infrastructure Week
Senators were back on Capitol Hill on Sunday as a bipartisan group of lawmakers put the finishing touches on a $1T infrastructure package. Touting the long-term economic benefits of the bill, key Democratic Senator Joe Manchin said the 2,702-page measure was likely to pass before the end of the week and would "keep us going for five to 10 years." The plan is one of President Biden's top legislative priorities and would be the largest investment in U.S. roads, bridges, ports and transit in decades.
According to Barron’s there are 5 stocks that look like bargains as infrastructure bill goes forward: Atlas Technical Consultants (ATCX), Jacobs Engineering Group (J), Montrose Environmental Group (MEG), Parsons (PSN), Tetra Tech (TTEK).
Wild week for Robinhood
Robinhood Markets (HOOD) had a wild week of trading, including a 50% jump in a single day, to finish the week up nearly 50%.
HOOD has been the most-mentioned stock on WallStreetBets, according to Quiver Quantitative. The rally is reminiscent of moves in GameStop and AMC), both of which are on losing streaks since HOOD came to market, leading to some speculation that retail investors are rotating cash from those names.
Cathie Wood's ARK Investment Management was an early fan of Robinhood and bought on the dip as it went public and steadily increased holdings to more than 3M shares for three funds, including the flagship ARK Innovation ETF (ARKK).
Earnings reports this week:
A lot of interesting companies will be reporting second quarter earnings this week. Some of the most anticipated earnings will be:
- Monday: AMC Entertainment, Berkshire Hathaway, Trade Desk Inc, Workhorse Group.
- Tuesday: Coinbase Global, McAfee Corp.
- Wednesday: Nio, Ebay, Coupang, Bumble, Wendy’s, Wix.com.
- Thursday: Walt Disney, Palantir, Airbnb, Baidu, Doordash.
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