Its National donut day and on such a glorious day all major US markets hit new highs. Both BTS and IBD continue to show favorable market trends however bond yields continue to fall. The NASDAQ is outperforming both the Dow and the S&P 500 Index thanks to the under-performance of banks and energy companies. At the close the Dow was up 61 to 21,205 on lighter trading volume. For the week the Dow gained about 125 points or 0.6%.
Manufacturing in May expanded for the 96th consecutive month with 15 of 18 industries reporting growth. The new orders index also picked up and for the first five months of the year new orders have shown the fastest pace of expansion since 2010.
The May jobs report came in soft with both good and bad points. The number of new jobs created was reported at 138,000 falling short of the 182k reading that the gurus had expected. What was good in the report came from a falling unemployment rate which tied a 16 year low of 4.3% down from 4.4%. Some economist blamed the soft report on calendar quirks and expect the number to rebound in June and stocks seem to agree with this notion.
The labor report shows that “total earnings” (total hours worked plus the wage rate) are up 4.2% from a year ago and in an environment where consumer inflation is about 2% the purchasing power of US consumers has room to buy more donuts. The bottom line for this latest labor report is that the Fed is still on track to push interest rates higher in June. The flattening yield curve however bears watching.
WTI oil prices continue to be range bound as the price today was down 1.3% to $47.70 per barrel. Baker Hughes reported the US rig count has now increased for 20 consecutive weeks. Last year the rig count was 325 and today stands at 733.