MARKET WATCH: March 5, 2021

The technology selloff intensified Thursday and Treasury yields rose above 1.54%, despite Fed Chair Powell’s pledge to keep interest rates low. The Nasdaq lost 274 points — nearly finishing in correction territory – while the Dow and S&P surrendered 346 and 51, respectively. Meanwhile, the TSX closed down 195 points, although rising crude prices helped temper Thursday’s overall losses.

U.S. Markets Lose Ground, TSX Slightly Up

For the four trading days covered in this report, the Dow lost 8 points to close at 30,924, the S&P 500 shed 43 points to settle at 3,768, while the tech-heavy Nasdaq plunged 469 points to close at 12,723. In Canada, the TSX bucked the trend, gaining 65 points to end at 18,125.

Strategy

The U.S. labour market’s recovery continued in February

Non-farm payrolls increased by 370,000 after an upwardly revised 166,000 gain in January and ahead of consensus estimates predicting a 200,000 increase. The unemployment rate ticked lower to 6.1% as the participation rate remained steady at 61.4%.

The leisure and hospitality sectors, which were the hardest-hit by the pandemic, gained 355,000 jobs accounting for most of the increase. Government employment declined the most reflecting cutbacks in state and local education followed by construction, while other sectors had modest gains.

Total hours worked dropped 0.5% month-over-month, and the prior month’s reading was revised lower to 0.7%. Overall, there were nearly 10 million unemployed Americans in February, almost double its pre-pandemic level. Over 40% of the unemployed have been out of work for 27 weeks or more, up 125,000 from January at 4.1 million. While the report is undoubtedly positive, there is softness in the details, including the lack of breadth and decline in total hours worked.

We believe the Federal Reserve is likely to look through the short-term narrative, focusing on its medium-term outlook that shows broad improvement over the course of the year.

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by Scotia Wealth Management - The Zukiwsky Group

MARKET WATCH: March 5, 2021

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