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Stocks saw a major reversal on Friday.
After selling off, the Dow, S&P 500 and Nasdaq all rebounded in the afternoon session as investors digested a better-than-expected jobs report.
Nonfarm payrolls jumped by 379,000 in February, and the unemployment rate fell to 6.2%. That compared with expectations of 210,000 new jobs and the unemployment rate to hold steady at 6.3%.
Here’s what experts are watching in the market and what they have to say about the U.S. economic outlook.
Jim Cramer, host of CNBC’s “Mad Money,” breaks down the moves in the market.
“I don’t really know how to mount a rally here other than the fact that we’re so oversold but we can get more oversold. Listen, you know, what maybe people say is that what we were scared about was a strong number and now it’s over with. Next week, we’ve got a lot of supply, but there’s some bargains here. I mean, we have a lot of stocks that are down 20% to 30%, and I’m looking at that, and maybe they go down 40% as they did during the last scare. … But it’s hard to stay as negative if we have a bounce because I think it’s going to draw people in, but I do think that any real bounce, sell some, because we saw what happened yesterday.”
Brian Deese, director of the National Economic Council, takes stock of the job gains and losses.
“We’ve got a long way to go. We’re still down 9.5 million jobs since the pandemic began. And that’s a bigger job hole than at any time during the Great Recession. And, while we saw some encouraging signs in leisure and hospitality in February, we also saw some real concerning signs as well. You saw 70,000 state and local educators laid off in February, so we’ve got a long way to go in this recovery. And, that’s part of the reason why we are going to be focusing on trying to get the rescue plan passed through Congress this weekend.”
David Kelly, chief global strategist at JPMorgan Asset Management, lays out why this could be beneficial for value stocks.
“I think this is good for value stocks. I do think we’re seeing a strong cyclical upturn in the economy here. I mean what’s going on is we’ve adapted to the pandemic quite well, the economy’s doing okay and now … policy is kind of like the accelerator that’s welded to the floor here. We’ve got this huge stimulus bill. It looks like it’s going to go through the Senate with not much modification from the House version, so about $1.8 trillion of stimulus, about $1.2 trillion of that hitting in the next seven months, that is enormous. And we’ve got the Federal Reserve basically committed to keeping rates low and keeping bond buying going even if we get a transitory surge in inflation. So I do see we’re building to a lot of growth, a lot of inflation as this year goes on, but that’s not bad for value stocks, which are sitting at low levels, it’s not bad if you want a steeper yield curve. It just does threaten growth stocks, it threatens high P/E stocks, and I think that’s what we’re seeing in markets.”
Meghan Shue, head of investment strategy at Wilmington Trust, says markets are at an “inflection point.”
“I would say in terms of what we’re seeing today in the price action I do think the bond market … has gone ahead and priced in a few more of these really good reports. It is consensus for us to have a very strong year of economic recovery. We do very much think we’re at an inflection point. For reference, we need to see that if we saw 500,000 net new jobs every month, it would still take us until the fourth quarter of 2022 to get back to where we were, so we’re still digging out of a very deep hole. Our expectation is for interest rates to move higher over the next year, probably approaching 2% actually … I do think it matters how fast we get there, and I think we’ve had quite an aggressive move and do not expect that speed to continue.”
Brent Thill, managing director at Jefferies, explains where there are opportunities this year.
“A lot of our clients continue to take profits given last year’s amazing run. Last year was a way better year than anyone would have expected. Multiples have been driven to highs we’ve never seen in stocks, like Snowflake trading at 50 times revenue. These are phenomenal stories, but I think everyone’s just taking a timeout. We think investors are going to come back into tech. … We continue to favor at least from a tech strategy perspective the [semiconductor] group over software. We think that is still a great sector. And then there’s some other sectors such as travel, dating, these industries that are going to open up in the back half of the year, ride share with Lyft, that are in better positions as the economy opens.”
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