Flat-to-down on pre-market futures on the last trading day of the second quarter
On this last day of June and the last trading day of the second quarter and first half of 2021 (how fast time flies!), The pre-market futures contracts are flat at this time. It’s been a good six months for market players, as Covid vaccines have delayed the spread of the coronavirus in most high-traffic areas of the United States, allowing for a much-anticipated grand reopening, which we continue to go through today. ‘hui. The Dow Jones is + 13.5% in the last six months, the S&P 500 + 16%, the Nasdaq + 14.4% and the small cap Russell 2000 + 18.6%.
There is a good chance that these growth rates will decline, as realities begin to encroach on the glorious fantasies of an inconsequential reopening. They’ve already started, in fact: Input costs on new homes have pushed prices out of the affordability range for many potential buyers, for example. With the stock market commonly known as a forward-looking indicator of economic growth, the second half of 2021 will more likely be a perception of conditions in the spring of 2022.
Private sector employment totals for the month of June came out this morning from Automatic data processing ADP, and the results were better than expected: + 692K new positions in the private sector were filled last month, up from the + 550-600K expected. Revisions for May fell to 886,000 from the 978,000 initially reported, but the two months in total produced 50,000 more jobs than expected.
Jobs in goods-producing rose to 68,000, while the service sector gained 624,000, meaning that nine out of ten jobs filled in the past month were in services. The distribution of branches confirms this: Leisure / Hotel industry continues to recover, + 332K over the month, followed by Education / Health at + 123K and Professional Services / Businesses at + 53K. Trade / transport / utilities added 62,000 new jobs, while construction added 47,000.
Large companies (> 500 employees) overtook medium-sized companies (50 to 499 employees) by 240,000 to 236,000, with small companies making the difference. For much of the recovery in the US workforce – now north of the 3.1 million new jobs created in 2021, according to the ADP survey – small businesses had put the most people back to work. Today, with their ability to come up with better healthcare packages and stock options, big companies seem to be winning.
Today’s ADP headline is also very much in line with expectations from the US Bureau of Labor Statistics (BLS) Friday non-farm payroll count: + 706K. That would be a notable increase from the 559K reported last month for May. The unemployment rate is expected to continue falling – 5.6% from 5.8% in last month’s report, the first time since pandemic unemployment has fallen below 6%. In June 2020, the unemployment rate was still 11.1%.
For today, the S&P 500 is looking to keep its four-day winning streak intact, which would naturally lead it to a new record at today’s close. The Nasdaq is up in six of the past seven sessions, as names in tech and other growth sectors regain favor with investors. So far, these ADP employment numbers have not moved the needle at all; we’ll see if anything changes by the start of the second half of 2021.