Joe Biden will be inaugurated in less than two weeks and Democrats now control the Senate as well as the House following this week’s Georgia run-off elections. That led to hopes that more stimulus would be a slam dunk.
“The ongoing battle against the pandemic is putting pressure on the real economy once again,” said Charlie Ripley, senior investment strategist for Allianz Investment Management, in an email to CNN Business, “and despite what financial markets are signaling, the labor market is indicating there is still a ways to go on the economic road to recovery.”
“The ability for Congress to provide additional fiscal support has increased and today’s employment report simply beckons them to do so,” Ripley added.
“Investors are already looking through this temporary period of economic weakness and instead focusing on the brighter outlook where fiscal spending, monetary stimulus and mass distribution of the COVID-19 vaccines together ensure the US economy quickly returns to its pre-pandemic path,” said Seema Shah, chief strategist at Principal Global Investors, in a report Friday.
The Dow rose more than 1.6% this week while the S&P 500 and Nasdaq gained 1.8% and 2.4%, respectively.
The hopes for an economic recovery are a likely reason why bond yields are bouncing back, too. The yield on the US 10-year Treasury recently rose above 1% for the first time since March and inched higher after the jobs report.
“This jobs number weakness today may be transitory,” said Jim Caron, portfolio manager in global fixed income at Morgan Stanley Investment Management, in an interview with CNN Business.
“This data was not good but investors are looking past the recent volatility to brighter days ahead,” Caron added. He also noted that investors realize that the Federal Reserve is likely to keep interest rates near zero for several more years — perhaps until 2024.
There are other signs of economic improvement lately, despite the jobs weakness.
The most recent ISM manufacturing report showed a continued rebound for many American industrial sectors, said Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Company.
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