US Close: Apple rally fizzles, Senate passes infrastructure, NFIB all about labor shortages

US stocks lost their sizzle after Treasury yields continued to climb higher as expectations have clearly shifted for Fed Chair Powell to turn hawkish at Jackson Hole and make a formal announcement on tapering asset purchases at the September FOMC meeting.  The Nasdaq is underperforming given the rise in Treasury yields, as the Dow Jones Industrial Average makes a fresh record high after the Senate passed Biden’s $550 billion infrastructure bill.

Earlier, the S&P 500 made a fresh record high after Bloomberg reported Apple’s new iPhones will include a new pro-focused camera with enhanced video-recording features.  Excitement over the new iPhone lineup however will likely deliver an incremental boost as Apple is already in the middle of a super cycle.  Last month, Apple already asked suppliers to ramp up production to make the next-generation iPhone, so a lot of the good news has been priced in.

Infrastructure

President Biden’s $550 billion infrastructure plan got a little closer to become a reality after the Senate passed it with a 69-30 bipartisan vote.  The House has signaled they will not pass this legislation unless the Senate can deliver on the bigger human infrastructure package that includes social spending and tax increases.  The current $3.5 trillion package doesn’t stand a chance of passing in its current form.  Progressives want to see the broader economic plan pass before voting on the $550 billion infrastructure plan.  The big uncertainty is if the partisan budget resolution is chopped down too much, will progressives refuse to hold up all infrastructure legislation.

NFIB

The NFIB Small Business Optimism Index fell in July as labor shortages remain the biggest challenge.  The headline index dropped 2.8 points in July to 99.7.  The report highlighted 49% of owners reported job openings could not be filled, a 48-year record high.  Today’s report supports the pressure to increase wages which should fuel the persistent inflation debate.  A slowdown in job creation might complicate the growing thesis that September’s nonfarm payroll will be robust and pave the way for a September taper.

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