Market Data as of Week Ending: 9/3/2021 unless noted otherwise
U.S. stocks advanced despite a combination of rising coronavirus cases in most parts of the U.S. and a weaker than expected jobs report. The S&P 500 set another record high on Thursday as companies near the end of quarterly reporting with a 90.9% earnings growth rate for the second quarter. 87% of companies in the S&P 500 reported either a positive earnings or revenue surprise, which are the highest values since FactSet began tracking this metric in 2008. Size was not a significant factor, but growth stocks once again outperformed their value counterparts. Most of the major economic sectors were positive and led by gains in more defensive sectors such as real estate, healthcare, and consumer staples. Economically sensitive sectors such as financials, energy, materials, and industrials were down and lagged the broader market. Developed foreign stocks in Europe and Asia outperformed U.S. stocks while Emerging Market stocks significantly outperformed both developed foreign and U.S. markets.
U.S. Treasury yields narrowly moved higher as the 10-year ended the week at 1.32%. Bond market sentiment favored risk assets as high yield bonds outperformed and long-term government bonds were the only major segment in negative territory. Investment grade corporate bonds ended the week with yields at just over 2.0% and high yield corporate bonds dropped to 4.6%.
Economic data released during the week was generally worse than expected. The U.S. non-farm payrolls increased by 235,000 which was substantially lower than the consensus expectations for a gain of nearly 750,000. Despite the deceleration in job gains, the unemployment rate fell to a new recovery low of 5.2%. Weekly jobless claims also reached a new recovery low of 340,000 yet remains elevated relative to the weekly average of 218,000 back in 2019. There are still more than 5 million fewer jobs in the U.S. than in February 2020 and approximately 3 million people have dropped out of the labor force. In other economic news, housing prices advanced 1.8% for the month while pending home sales dropped for the second consecutive month. The ISM reported that the Services PMI® dropped from the all-time high of 64.1 in July to 61.7 which is the 15th consecutive month of growth for the services sector.