The major U.S. equity indexes closed higher last week, led by impressive performances within the energy and technology sectors. petroleum posted its first back-to-back weekly gain since February, as evidence showed that U.S. oil companies are cutting production faster than expected and as signs of increased demand emerged with the lifting of coronavirus restrictions by some states.
In the cash market last week, the benchmark S&P 500 Index settled at 2929.80, up 99.09 or +3.50%. The blue chip Dow Jones Industrial Average finished at 24331.32, up 607.63 or +2.56% and therefore the technology-based NASDAQ Composite closed at 9121.32, up 516.37 or +6.00%.
In economic news, the April employment report showed that a record 20.5 million jobs were lost last month, erasing roughly all the roles that the economy had added during this past decade’s expansion. “The bright side was that 80% of the work losses were reported as temporary layoffs,” consistent with Craig Fehr at Edward Jones.
On the charts, the S&P 500 Index has now recovered about 50% of its losses from the record high earlier within the year on hopes that economy activity could also be bottoming as lockdowns ease and economies reopen. The NASDAQ Composite is trading higher for the year.
More on the US Jobs Report
The Department of Labor reported on Friday that Nonfarm Payrolls fell by 20.5 in April and therefore the percentage rose to 14.7%, both post-World War II records. Economists had been expecting a loss of 21.5 million jobs and therefore the percentage to surge to 16%.
Additionally, the “real’ percentage , which incorporates workers not trying to find jobs and therefore the underemployed, surged to 22.8%.
Average hourly earnings jumped nearly 5% from a year ago, also easily a replacement record but more reflective of the balance of job losses coming from lower-wage occupations, thus skewing the info .
Note the Breakdown of Unemployment
As expected, the most important hit to the leisure and hospitality industry, which lost 7.7 million workers, 5.5 million of whom came from eating and drinking establishments.
Education and health services lost 2.5 million, while professional and business services also as retail both saw 2.1 million workers lose their jobs. the general percentage for service occupations ballooned from 4% in March to 27.1%.
Manufacturing and “other services” dropped by 1.1 million apiece and government fell by 980,000. Construction dropped 975,000 and transportation and warehousing fell by 584,000.
Why is the NASDAQ Composite Outperforming the Dow?
Last week, the NASDAQ turned higher for the year, while the Dow remains struggling at 50% of the whole break from its all-time high. the worth action reflects the way investors are viewing the “new” economy after the coronavirus pandemic. Clearly, investors are depending on technology.
The NASDAQ may be a stock market index consisting of quite 3000 companies whereas DJIA consists of only 30 major companies traded on the NYSE and NASDAQ.
NASDAQ mainly comprises of companies within the technology sector or the businesses within the growth stages while Dow Jones is more about the stock price and is hence hooked in to the earnings.
Volatility within the case of the Dow is low because it consists of the highest 30 companies by sector and hence these blue-chip companies contribute low volatility whereas, as an example , the NASDAQ-100 is more volatile as compared to the Dow Jones due to the high risk and growth-oriented companies (the tech giants).
The performance of NASDAQ mainly depends on how the technology stocks are faring but within the case of the Dow Jones it’s about the 30 companies together and not any company individually.