By Scotia Wealth Management- The Zukisky Group

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Market Watch: Sept. 17, 2021

Sep 17, 2021 | 5:16 PM

Markets Struggle for Traction After Last Week’s Losses

It’s been a rough month so far for North American equities, as markets have struggled with an abundance of mixed economic data and ongoing challenges presented by the Delta variant. As of Wednesday, the Dow was down more than 1.5% since the start of September.

However, it was a strong start to the trading week on Monday as the S&P 500 snapped a five-day losing streak, while the TSX also closed higher — its first positive trading session since before Labour Day, thanks in large part to a rising energy sector. U.S. and Canadian stocks fell once again on Tuesday, even after new data showed that U.S. inflation had cooled slightly in August. According to the U.S. Labor Department, the consumer price index rose a seasonally adjusted 0.3% in August from July—down markedly from June’s 0.9% pace. By Tuesday’s close, the Dow was off 292 points, while the TSX dropped 113. It was a bounce-back day on Wednesday, as surging oil prices (along with Tuesday’s positive U.S. inflation data) helped fuel a broad rally. All three major U.S. indexes posted strong gains, with the Nasdaq adding 124 points. In Canada, the TSX added 140 points, despite some potentially worrying inflation numbers.

According to Statistics Canada, the consumer price index jumped 4.1% in August, year over year, up from 3.7% in July. Prices rose in nearly all categories, led by an 8.7%-jump in transportation costs, fueled largely by skyrocketing gas prices. U.S. data released Thursday was fairly mixed. Although initial jobless claims rose to 332,000 – an increase of 20,000 – U.S. retail sales surprised to upside, rising 0.7% in August. In Thursday trading, U.S. stocks opened lower but pared losses throughout the day to finish fairly flat. In Canada, the TSX was down 92 points on weak economic data, including wholesale trade figures and declining housing starts.

An Up-and-Down Week for Markets

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For the four trading days covered in this report, the Dow added 143 points to close at 34,751, the S&P 500 rose 16 points to settle at 4,474, while the technology-heavy Nasdaq climbed 67 points to close at 15,182. In Canada, the TSX surrendered 31 points to end at 20,602.

Strategy

The average worker age is expected to increase by nearly four years by 2030, reflecting the large-scale retirement of Baby Boomers and slowing demographic trends.

U.S. employment is expected to see meagre growth during the remainder of the decade, with technology eliminating some roles and retiring Baby Boomers contributing to a drop-off in the share of Americans participating in the job market. According to new analysis from the Bureau of Labour Statistics (BLS), the U.S. economy is likely to add 11.9 million jobs through 2030. However, the bulk of the new positions will reflect the recovery from the COVID-19 pandemic. About one-third of the jobs created will be in low-wage work, a part of the economy devastated by virus-containment measures. That covers categories that pay less than US$32,000 a year, or roughly US$15 an hour. Total employment is projected to increase about 7.8% by 2030, to 165.4 million. That rise, which equates to just over 1 million added to payrolls each year, is almost half the annual gain in the past decade, setting aside a decline during last year’s pandemic recession.

After being hammered by a pandemic that kept people home, retail trade is projected to lose more than half a million jobs by 2030, the most of any sector. The crisis has served to deepen struggles already faced by brick-and-mortar retailers, competing with the ease and access of online shopping. More than half of the industries projected to have the most rapid declines are in manufacturing. The BLS expects global competition and the adoption of productivity-enhancing technologies, such as robotics, to continue to pressure U.S. factory employment. While employment is expected to expand to 165.4 million in 2030, the actual share of the population in the labour force will decline to 60.4% by the end of the decade from 61.7% in 2020. That is primarily a result of Baby Boomers retiring, a continuation of the declining trend in men’s participation and a slight drop for women. By 2030, almost one in 10 workers are projected to be age 65 or older, and the average worker will be about 3 1/2 years older by the end of the decade than in 2000.

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