The S&P 500 index closed at an all-time last week. Equities ground higher on news that the Dela variant of COVID-19 has started to fade in some of the hardest hit areas. August payroll numbers were announced Friday much weaker than expectations. Equities were resilient as the likelihood of the Federal Reserve tapering their balance sheet in 2021 is fading which might push back the timetable for the Fed raising rates in 2022.
The yield curve steepened last week with shorter-dated treasury yields falling and longer-dated treasury yields finishing higher for the week. Treasury yields were mixed throughout the week as investors waited intently for Friday’s jobs report. Nonfarm payrolls increased 235,000 in August, much lower than the consensus expected 733,000. Professional and business services had the largest increase of 73,000, while restaurants & bars declined 42,000 due to headwinds from the Delta variant and college-age workers returning to school. Despite the big miss in the headline number, investors found bright spots in the jobs report. The unemployment rate in August fell to 5.2%, the lowest level since the beginning of the pandemic. Average hourly earnings are up 0.6% versus last month and are up 7.8% since the last pre-pandemic jobs report in February 2020.