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Nasdaq Hits New All-Time High Close Ahead Of Today's Employment Report
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Stocks closed mostly higher yesterday. Great week so far for the markets. And that comes on the heels of the best quarter in decades (and for the Nasdaq, the best quarter in 33 years). The Nasdaq also recorded a new all-time high close yesterday.
In spite of the increase in coronavirus cases, which has slowed reopening plans in several states, the gains we're seeing in the economy, even with the reopening pains, continues to push stocks higher.
We've had a litany of strong economic reports in the last several weeks. And that list was added to with yesterday's ISM Manufacturing Index which showed a 22.0% increase over last month, while the PMI Manufacturing Index showed a 25.1% increase.
We also got a bullish ADP Employment report which estimated 2.369 million private payroll jobs being created in June, while sharply revising May's report up from -2.760 million to +3.065 million.
The ADP report is often considered a precursor to the official Employment Situation report which comes out two days later (but will be out today given the day off on Friday). While the reports can vary widely from one another, the positive jobs estimate by ADP bodes well for today's report. The official headline consensus is for 3 million jobs (2.660 million in the private sector and 340K in the public), with the unemployment rate ticking down again from 13.3% to 12.4%.
We'll also get Weekly Jobless Claims, International Trade, Motor Vehicle Sales, and Factory Orders. But the Employment report is the main event.
By the way, yesterday marked the official start of the USMCA (U.S.-Mexico-Canada Agreement), which replaces the old North American Free Trade Agreement (NAFTA).
With Mexico and Canada the #1 and #2 trading partners of the U.S., the USMCA deal, in many ways, is bigger and more important than the Phase 1 trade deal with China (our #3 largest trading partner).
It was also great to hear that Pfizer (in partnership with BioNTech), reported positive results on their potential vaccine yesterday. The findings were preliminary. And there's still lots of work to do. But the market cheered the news (as premature as it might be), since a successful vaccine (whenever that comes), would be the key for the country and the world to fully get back to normal.
Don't forget, Moderna is working on a vaccine as well, and reported positive results from a Phase 1 clinical trial back in May. And AstraZeneca is working on a vaccine too.
Sooner or later, somebody will get it done. And that will be a day to remember.
In the meantime, the economic recovery is underway. We're seeing huge pent-up demand being unleashed. And that's why stocks have been on the move.
And with the expansion continuing, bumps and all, it looks like there's a lot more upside to go.
So make sure you're taking full advantage of it.
That means getting into the right stocks and staying out of the wrong ones.
Even though we are in a confirmed bull market, not all stocks are created equal.
There have been, and will continue to be, plenty of tried and true names leading this market. But there will also be plenty of new names that many people may not have even heard of before. Because the virus outbreak, and the upheavals it's brought about for businesses and consumers, will change large portions of our economy. And the companies that can adapt will thrive and become new market leaders, while those that can't will suffer. To learn how to determine which is which, be sure to read our latest commentary...
It's a Confirmed Bull Market, Which Stocks Will Lead the Way?
Best,
Kevin Matras
Executive Vice President, Zacks Investment Research
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