Market Update – 4/5/21

Market+update

Karri Terra | Pixy

Thomas Ghita

The U.S. stock futures rose for the week of March 29 to April 5, as investor confidence regarding recovery in the services sector rebounded in the middle of a strong jobs report for March.

The U.S. jobs report for March saw a seasonally adjusted 916,000 jobs being added to the economy, the highest gain since August of last year. This has lowered the unemployment rate to 6%, which is still 2.5% higher than the level it was pre-pandemic, but continues the trend down since March of last year.

The case is the same with the number of unemployed people, which currently sits at 9.7 million, compared to 5.7 million before the COVID-19 pandemic.

Despite unemployment numbers still being higher than they were at pre-pandemic levels, there is still extremely high confidence as the combination of federal stimulus, increasing consumer sentiment and reduced fears regarding coronavirus look to create a “seismic shift” in the U.S. economy, according to P.h.D. economist Beth Ann Bovino, at S&P global.

This seismic shift has already begun to reveal itself through new data released regarding increased consumer spending on things such as restaurants, hotels and airplane tickets. This surge in spending comes as a result of pent-up consumer demand and trillions of dollars in coronavirus savings.

Increased spending has especially benefited restaurants, which have seen a boom in their revenue through indoor dining, although it is still down 33% from December 2019.

This has had its influence on the major indexes as well: with the S&P 500 increasing 2.5% for the week to $4050 as of April 5, the Dow Jones Industrial Average climbing 1.5% for the week to $33541 and the NASDAQ Composite seeing a growth of 4.7% for the week, currently sitting at $13700.

Moving away from general economic conditions that are influencing the markets, auto-makers are experiencing a large boom in sales amid increasing demand for automobiles and a global semiconductor shortage, which has halted production.

General Motors Company has reported that their first quarter sales are up by 19%, with Toyota Motor Corporation and Volkswagen posting similar gains, with a 22% and 21% increase in sales for the first quarter respectively, according to IBD.

Although this spike in sales seems beneficial to automakers on the path to post-pandemic recovery, it may end up hurting them due to the current shortage in semiconductors, due to extremely high demand from other industries. GM and Ford Motor Company have already had to close some of their North American plants despite the increased demand for their vehicles, as they are unable to provide an adequate number of chips for the cars being produced.

Looking forward, there needs to be a focus on increasing economic growth and leisure industries, which indicate a broader economic recovery and help prop up other manufacturing industries.