The week’s key economic releases were mixed again, but apart from the housing market which has been clearly affected by rising mortgage rates, the outlook for the U.S. economy continues to improve. Non-farm payrolls surged higher by 916,000 according to the government jobs report while the unemployment rate fell to 6.0%, and job creation was revised upwards substantially for January and February despite the still large number of new jobless claims. The ISM manufacturing PMI also beat expectations by a wide margin, hitting a multi-decade high near 65. The Chicago PMI, the CB consumer confidence number, the Challenger job cuts estimate, and total vehicle sales also made bulls smile.
The short-term technical picture remains mixed on Wall Street, as even though the S&P 500 and the DOW are just shy of their all-time highs, the Nasdaq is still struggling to resume its rally. The major indexes are now all above their 50-day moving averages, and despite the recent pullback, the indexes are all well clear of their 200-day moving averages. Small-caps remained volatile in the aftermath of the Archegos-induced sell-off, but the Russell 2000 finished the week on a positive note after recapturing its 50-day moving average while remaining way above its long-term indicator. The Volatility Index (VIX) had another hectic week bouncing around in the vicinity of the crucial 20 level, but the “fear gauge” plunged to a new recovery low on Thursday, closing the week near 17.3. We continue to expect further upside in markets into late spring/early summer.
