Stocks launched a powerful rally as the February jobs report came in well above expectations. At the close the Dow was up 440 points to 25,335. Trading volume was heavy. Now that’s what I call “Good Friday”! For the week the Dow gained 797 points or 3.2%.
The February labor report came out of the gates like a Tesla Roadster on a Falcon Heavy as 313,000 jobs were created versus estimates calling for about 205k new jobs. The unemployment rate stayed at 4.1% and wage growth was 2.6%. The report showed labor force participation moved up to the highest level in 6 months at the fastest pace since 2003. Most of the new jobs were in construction (61,000) with manufacturing adding another 31,000. The gurus called the report “Goldilocks” because it showed strong job creation without a significant uptick in wage inflation. The Federal Reserve will meet on March 21st and strength of this report virtually assures us that a quarter point rate hike is on the table for the meeting.
In the technology sector chip stocks are starting to lead the way higher. A recent discussion with Fidelity showed that demand for chips is rising thanks to autonomous cars, 5G wireless rollout, crypto currency and robotics. One example given was that a standard car uses a couple hundred chips while an electric car with autonomous features uses over 2,000 chips. Coupled with this rising demand is a consolidation trend wherein companies in the sector are starting to consolidate.