Dow soared 492, advancers over decliners about 4-1 & NAZ gained 61. The MLP index rose 3+ to 150 & the REIT index jumped 11 to the 361s. Junk bond funds remained in demand for their high yields & Treasuries were heavily sold while stocks rallied. Oil went up over 37 & gold plummeted 35 to 1698.
AMJ (Alerian MLP Index tracking fund)
Companies trimmed another 2.76M workers in May as the coronavirus pandemic continued to slice thru the US economy, according to a report from ADP. Job losses were especially deep in large businesses, which reported a decline of more than 1.6M. Manufacturing took one of the biggest hits as the sector lost 719K workers. The reported total was well below the 8.75M estimate & could be another sign that the worst of the coronavirus-related layoffs is over. May's loss is “obviously an awful number, but not as catastrophic as expected,” said Mark Zandi, chef economist at Moody's Analytics, which compiles the report with ADP. Zandi said the ADP count is supported by a steep drop in the level of continuing jobless claims, or from people who have been receiving unemployment benefits for at least 2 weeks. For the most recent reporting week, that total plunged by 3.86M to 21.1M. That number reached an all-time peak of 24.9M for the week ended May 9, the week before the May 12 survey period used by both the ADP & the gov in its nonfarm payrolls survey. Consequently, Zandi said that Fri's official Labor Dept count will show a payroll decline closer to 3M than the 8.3M that is expected. May's count also marked a precipitous drop-off from the 19.6M plunge in Apr, an estimate that was revised from the initially reported 20.2M. The Apr loss was by far the worst in the history of the ADP survey. “The impact of the Covid-19 crisis continues to weigh on businesses of all sizes,” said Ahu Yildirmaz, co-head of the ADP Research Institute. “While the labor market is still reeling from the effects of the pandemic, job loss likely peaked in April, as many states have begun a phased reopening of businesses.” Economists expect that Fri's figure, which includes gov workers, will show a decline of 8.3M that would push the unemployment rate up to 19.5% from Apr's 14.7%. Service-related industries, which make up a greater proportion of the jobs market, lost 1.967M positions, compared with the 794K from goods producers, according to ADP.
Private payrolls decline by 2.76 million in May, ADP says, a smaller drop than feared
U.S. services sector off 11-year trough, still contracting
U.S. auto sales rebound somewhat from dismal April as states lift coronavirus restrictions
With all that is going on in the news, the bulls are firmly in command of the stock market. The latest data suggests that the economy is healing reasonably well under the circumstances. And the gloomy data for Q2 GDP has been widely predicted. The Dow is back over 26K & about 10% below its recent record. However, economic performance in H2 is unclear.
Dow Jones Industrials
AMJ (Alerian MLP Index tracking fund)
| CL=F | Crude Oil | 36.71 | -0.10 | -0.3% |
| GC=F | Gold | 1,693.10 | -40.90 | -2.4% |
Companies trimmed another 2.76M workers in May as the coronavirus pandemic continued to slice thru the US economy, according to a report from ADP. Job losses were especially deep in large businesses, which reported a decline of more than 1.6M. Manufacturing took one of the biggest hits as the sector lost 719K workers. The reported total was well below the 8.75M estimate & could be another sign that the worst of the coronavirus-related layoffs is over. May's loss is “obviously an awful number, but not as catastrophic as expected,” said Mark Zandi, chef economist at Moody's Analytics, which compiles the report with ADP. Zandi said the ADP count is supported by a steep drop in the level of continuing jobless claims, or from people who have been receiving unemployment benefits for at least 2 weeks. For the most recent reporting week, that total plunged by 3.86M to 21.1M. That number reached an all-time peak of 24.9M for the week ended May 9, the week before the May 12 survey period used by both the ADP & the gov in its nonfarm payrolls survey. Consequently, Zandi said that Fri's official Labor Dept count will show a payroll decline closer to 3M than the 8.3M that is expected. May's count also marked a precipitous drop-off from the 19.6M plunge in Apr, an estimate that was revised from the initially reported 20.2M. The Apr loss was by far the worst in the history of the ADP survey. “The impact of the Covid-19 crisis continues to weigh on businesses of all sizes,” said Ahu Yildirmaz, co-head of the ADP Research Institute. “While the labor market is still reeling from the effects of the pandemic, job loss likely peaked in April, as many states have begun a phased reopening of businesses.” Economists expect that Fri's figure, which includes gov workers, will show a decline of 8.3M that would push the unemployment rate up to 19.5% from Apr's 14.7%. Service-related industries, which make up a greater proportion of the jobs market, lost 1.967M positions, compared with the 794K from goods producers, according to ADP.
Private payrolls decline by 2.76 million in May, ADP says, a smaller drop than feared
US services industry activity pushed off an
11-year low in May, but businesses appeared in no rush to rehire workers
as they reopen, supporting views the economy could take years to
recover from the devastation caused by the COVID-19 crisis. The
Institute for Supply Management (ISM) said its
non-manufacturing activity index rose to a reading of 45.4 last month
from 41.8 in Apr, which was the lowest since 2009 & first
contraction since then. A
reading below 50 indicates contraction in the services sector, which
accounts for more than 2/3 of US economic activity. The forecast called for the index increasing to a reading of 44.0
in May. The report came on the heels of the ISM's manufacturing
survey on Mon showing factory activity easing off an 11-year low in
May. Sentiment surveys have suggested the slump in economic activity
triggered by COVID-19 has bottomed. The economy contracted at a 5%
annualized rate in Q1, the worst performance since the
2007-09 recession. GDP is expected to decline at a
rate as sharp as 40% in Q2, which would the biggest
contraction in output since the depression of the 1930s. The
ISM survey's measure of new orders for the services industry increased
to a reading of 41.9 in May from 32.9 in Apr, which was the weakest
since the series started in 1997. The survey's index of services
industry employment edged up to 31.8 last month from 30.0 in Apr,
which was the lowest since 1997. That points to the distress in
the labor market, which is expected to be underscored by the
gov's closely watched employment report for May, to be
released on Fri. The survey is likely to show a drop of 8M jobs last month after a
historic 20.5M plunge in Apr. The unemployment rate is
forecast rocketing to 19.7%, a post-World War II high, from 14.7% in
Apr.
U.S. services sector off 11-year trough, still contracting
US auto sales plummeted in May from the year before, but showed signs of recovering from their massive collapse in Apr as
states loosened restrictions that shuttered many dealerships & kept
consumers at home, according to early sales data from a majority of the
automakers & industry analysts. Toyota (TM), Honda & Hyundai
were among the automakers to report double-digit sales declines last
month compared to May 2019. Smaller automakers such as Mazda & Volvo
reported slight declines. “Retail
consumers are coming out looking for cars and trucks,” Bob Carter,
exec VP of sales for TM. “What
hasn’t yet returned to the auto industry is the fleet commercial buyer,
particularly rental car. Those sales continue to be suppressed at about
20%.” TM reported a 25.7% decline in sales last month
compared to May 2019. Sales of more than 165K
vehicles for the month still managed to top its internal expectations of
125K vehicles. The pace of sales picked up in May, averaging
12.2M vehicles on an annualized basis, according to Autodata. That means if the same number of vehicles were sold every month
throughout the year, that would be the industry's total sales for 2020.
That compares with an annualized sales rate of 8.6M vehicles in
Apr. Auto research firms expected new vehicle sales to be slightly less than 1.1M vehicles in May, down by about 32-33% compared with May 2019. While better than expected, the industry’s sales are still a long way off from last year, when automakers sold more than 17M vehicles
.
U.S. auto sales rebound somewhat from dismal April as states lift coronavirus restrictions
With all that is going on in the news, the bulls are firmly in command of the stock market. The latest data suggests that the economy is healing reasonably well under the circumstances. And the gloomy data for Q2 GDP has been widely predicted. The Dow is back over 26K & about 10% below its recent record. However, economic performance in H2 is unclear.
Dow Jones Industrials
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