Equities Continue to New Highs on Strong Earnings, Jobs Report

The U.S. stock market ended last week with strong gains, which led to record highs for the S&P 500 and the NASDAQ. The surge in stock values was largely driven by a better-than-expected jobs report, falling crude oil prices and robust tech company earnings. Investors continued to favor risk, despite the ongoing tensions in the Middle East. Information Technology led the market sectors, while Energy and Utilities underperformed. Crude oil prices declined as President Trump said the ceasefire with Iran would remain in effect despite fresh clashes between U.S. and Iranian forces. Bond yields changed little last week as uncertainty persisted over how quickly the U.S. and Iran might reach an agreement to end the conflict.

Employment Grew More Than Expected in April

Employment exceeded expectations in April after edging up 115,000. The total number of employed ticked down by 226,000 to 162.6 million last month. The unemployment rate remained at 4.3%. Both the employment-population ratio and the labor force participation rate dipped 0.1 percentage point to 59.1% and 61.8%, respectively. The number of unemployed rose by 134,000 to 7.4 million. The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 1.8 million and accounted for 25.3% of all unemployed people. In April, average hourly earnings rose by $0.06, or 0.2%, to $37.41. Over the year, average hourly earnings have increased by 3.6%. The average workweek edged up by 0.1 hour to 34.3 hours in April.

Eye on the Week Ahead

Much of the economic data released this week is focused on inflation. The Consumer Price Index and the Producer Price Index, both for April, are out this week. Consumer prices rose 0.9% in March as price pressures seem to be trending higher.