The bearish undertone continued early in the week, but record-low weekly unemployment claims prompted investors to turn optimistic and the markets ended up trading sideways, indicating a lack of overall direction.
It’s been a long time since the weekly unemployment claims figure was this low, and this week, it turned out at 209,000 – the lowest in almost five decades. More good news for the American factory sector came in later in the week as durable goods orders rose more than expected in March.
Despite a robust labor market and some stellar corporate earnings, the fact remained that bond yields have jumped over 3% this week and the GDP is expected to grow at a much slower pace in Q1 2018 compared to the previous quarter.
The euphoria around President Trump’s tax cut is slowly evaporating from the market, but the puzzle remains on how businesses continue to hire and retain employees while economic growth prospects are becoming limited in the short-run. So, either the labor market is overheated and this hiring bonanza will stop soon or we will see consumer spending skyrocket, which will boost the entire economy. Let’s wait and see.
Be sure to check out our previous week’s edition here, in which bullish sentiment in the stock market was capped by surging oil price.