Stocks Post Weekly Gains Heading into Holiday Weekend…..

U.S. equities headed into the extended Easter holiday weekend higher, notching weekly gains along the way. Growth stocks, notably Information Technology and Communication Services sectors, led the way in the wake of yesterday’s unveiling of President Biden’s $2 trillion infrastructure spending plan. The markets remained buoyed by economic and earnings optimism for 2021 as the new quarter began, which seemed to counter the recent spike in Treasury yields and the bounce in the U.S. dollar. On the economic front, the ISM Manufacturing Index jumped to the highest since the early 1980s, while initial jobless claims came in a bit higher than expected before tomorrow’s March nonfarm payroll report which will be released even though the markets are closed in observance of Good Friday. In earnings news, Micron Technology topped profit projections and issued stronger-than-expected Q3 guidance. Treasuries were higher, applying downside pressure on yields, and the U.S. dollar was lower. Gold saw a solid gain, and crude oil prices jumped following the decision from OPEC+ to gradually increase output over the coming months. Europe finished mostly higher, while markets in Asia saw widespread gains.

The Dow Jones Industrial Average rose 172 points (0.5%) to 33,153, the S&P 500 Index increased 47 points (1.2%) to 4,020, and the Nasdaq Composite was up 233 points (1.8%) at 13,480. In moderate volume, 877 million shares were traded on the NYSE and 4.5 billion shares changed hands on the Nasdaq. WTI crude oil gained $2.29 to $61.45 per barrel. Elsewhere, the Bloomberg gold spot price was $22.15 higher at $1,729.86 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—moved 0.3% lower to 92.92. Markets were higher for the week, as the DJIA moved 0.2% to the upside, the S&P 500 gained 1.2%, and the Nasdaq Composite jumped 2.6%.

Jobless claims come in higher than expected, March manufacturing activity accelerates…..

Weekly initial jobless claims came in at a level of 719,000 for the week ended March 27, above the Bloomberg estimate of 675,000, and compared to the prior week’s downwardly revised 658,000 level. The four-week moving average decreased by 10,500 to 719,000, and continuing claims for the week ended March 20 fell by 46,000 to 3,794,000, north of estimates of 3,750,000. The four-week moving average of continuing claims dropped by 147,250 to 3,978,500.

The March Institute for Supply Management (ISM) Manufacturing Index showed manufacturing growth (a reading above 50) grew at a faster pace than expected. The index rose to 64.7 from February’s unrevised 60.8 level, and versus estimates of 61.5. The index jumped to the highest since the early-1980s as new orders, production, employment and backlog of orders all saw growth accelerate. However, inflation pressures remained elevated with the prices index at 85.6 after dipping from 86.0.

The ISM said, “The manufacturing economy continued its recovery in March. However, Survey Committee Members reported that their companies and suppliers continue to struggle to meet increasing rates of demand due to coronavirus (COVID-19) impacts limiting availability of parts and materials. Extended lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are affecting all segments of the manufacturing economy. Worker absenteeism, short-term shutdowns due to part shortages, and difficulties in filling open positions continue to be issues that limit manufacturing-growth potential.”

The final March Markit U.S. Manufacturing PMI Index was revised slightly higher to 59.1 from the preliminary level of 59.0, in line with forecasts and above February’s unrevised 58.6 level. A reading above 50 denotes expansion. The report noted that this reading was the second strongest improvement in the health of the U.S. manufacturing sector since data collection began in May 2007. The report also pointed out that overall expansion was supported by the steepest rise in new orders since June 2014, although production was reportedly held back by supply shortages.

Construction spending decreased 0.8% month-over-month (m/m) in February, versus projections of a 1.0% decline, and following January’s downwardly revised 1.2% increase. Residential spending dipped 0.2% m/m while non-residential spending fell 1.3%.

Treasuries were higher, as the yield on the 2-year note was little changed at 0.16%, while the yield on the 10-year note fell 6 basis points (bps) to 1.68%, and the 30-year bond rate was down 7 bps at 2.34%.

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