Opening Day, claims miss, ISM impresses

Opening Day is here and baseball fans will happily be returning to stadiums, albeit mostly at partial capacity.  America’s pastime is hopeful for full ballparks in 2021 and that type of optimism is being reflected across all pre-pandemic activities.  The stimulus check impact on retail trading is waning and that could be because many Americans are looking to go big on attending sporting events, traveling across the country, vacationing, visiting family and friends, and revamping wardrobes before going out to restaurants/pubs and returning to the office.

ISM Manufacturing Index jumps, NFP looms

The opening act to the Friday nonfarm payroll report saw investors shrug off a disappointing jobless claims report and focus on the ISM manufacturing index’s sharpest acceleration in over 37 years.  The declining trend in jobless claims took an unexpected break.  Weekly jobless claims rose to 719,000, worse than consensus estimate of 675,000 and downwardly revised prior reading of 658,000.  Last week’s big jobless claim drop might be attributed to the changing of the seasonal calculations over the past year.  The accuracy of jobless claims will get scrutinized as Google searches for “file for unemployment” plunge.

The bright economic data release of the day was the ISM manufacturing report.  US manufacturing surged to 64.7, the highest levels in 37 years.  The new orders and employment components suggest the economy is on the right track.  The employment subindex rose to 59.6, the highest level since February 2018.

Tomorrow’s nonfarm payroll report has a wide range of estimates from 232,000 to 1-million jobs created in March, with a consensus estimate of 650,000.  A print above a million should not come as a surprise considering how quickly hospitality and leisure jobs are coming back.

The S&P 500 index finally rallied above the 4,000 level for the first time as investors embraced the US growth outlook following President Biden’s infrastructure plan.  European indexes are outperforming as the COVID situation appears to be turning a corner in Europe as France sees the virus peak nearing.  With the US rapidly delivering COVID vaccines, herd immunity seems to be nearing and that means a floodgate of supply should be available for Europe in a couple of months.

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