Wall Street Stocks Advance to Kickstart Second Half of 2021

02 Jul 2021 · 3rd Party Analysis

WRITTEN BY ThorFX

In Summary

  • US equities gained on Thursday as market players anticipated the jobs report today
  • European bourses outperformed Wall Street rivals, oil stocks led the gains

Stock on Wall Street wavered around the flatline for most of the session on Thursday but ultimately pushed higher, with the S&P500 logging its sixth session in the green and posting another all-time high.

The broad-market index added 22.44 points, or 0.52%, to end the first trading day of the second half of the year at 4,319.94. The Dow Jones Industrial Average advanced 0.38%, or 131.02 points, to 34,633.53. The Nasdaq Composite climbed 18.42 points, or 0.13%, to 14,522.38.

Equities were lifted on Thursday as investors cheered the latest bit of data highlighting the rapid growth of the economy. Worker filings for unemployment benefits reached a new pandemic low, falling by 51,000 to 364,000 last week from 415,000 a week earlier. The growth backdrop, accompanied by increased confidence in the Federal Reserve’s positioning toward the economy, has painted a rosier outlook for the current quarter.

The Federal Reserve’s stance to keep monetary policy supportive until the labor market reaches a maximum level has boosted investors’ risk appetite, resulting in the continued recovery-driven hunt for stocks across sectors. Over the past six months, investors have been rotating either to real economy shares, so-called value stocks, or pandemic-resistant stocks, such as technology companies, also called growth stocks.

Anticipation for Employment Data

The latest sign of a rebounding economy is expected later today as the Labor Department reveals its jobs report for May. Economists expect that the labor market added around 700,000 jobs last month, with the unemployment rate falling to 5.6%.

Even with this relatively high number added to the labor force, hiring would still need to add about 6.6 million new jobs to reach pre-pandemic levels.

Federal Reserve officials, however, seem divided over the prospects of easing the Fed’s monetary policy. Federal Reserve Bank of Philadelphia President Patrick Harker, speaking to the Wall Street Journal, said that he would like to see tapering starting as soon as this year. “I would like to see tapering begin. I’d like to see it happen sooner rather than later. I’d like to see it being a slow, methodical process.”

While US stocks wobbled on Thursday ahead of the jobs report today, European bourses made steady gains. Outperforming their Wall Street rivals, shares in Europe advanced broadly across markets. The pan-European Stoxx 600 gained 0.62%, while Spain’s IBEX35 and UK’s FTSE100 gained 1.26%, and 1.25%, respectively. Germany’s DAX gained 0.47%, and France’s CAC40 added 0.71%. The gains across European markets were led by oil-and-gas stocks, with oil prices adding around $2 on the day.

In cryptocurrency price action, the broad digital asset market slipped on Thursday, with the largest crypto token falling 3.4%. Bitcoin has been pressured for over a month. Near the end of May, authorities in China renewed their efforts to ban crypto mining and trading. In mid-June, Chinese officials ordered the closure of Bitcoin mining operations in the Sichuan region, the second most popular crypto mining destination in

the country. Despite the drought, crypto market participants remain assured that the nascent market will rebound.

Gold advanced on Thursday as the US dollar traded fairly flat. The precious metal added 0.4% to its price and ended the day at $1,778. Gold bugs are still unable to break the immediate resistance of $1,780 which has been keeping a lid on the asset for the past couple of weeks.

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