S&P 500 hits fresh record highs on robust NFP report

Vrasidas Neofytou
Head of Investment Research

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S&P 500 hits fresh record highs on robust NFP report

S&P 500 continues its bullish upward momentum, posting more than 15% gains in the first six months of the year amid a strong rotation into value and cyclical stocks as the US and global economies reopen from the pandemic.

The broad market index has also started strongly the second half of 2021, as the improved US economic data combined with the massive monetary and fiscal stimulus in response to the pandemic have boosted risk appetite for financial assets, lifting the index to fresh record highs.

The index rose almost 1% on Friday July 02, breaking above the 4,350 level for the first time ever driven by the better-than-expected US Non-Farm Payrolls report for June.

S&P 500 index, Weekly chart

Investors increased bullish bets on the market after the US Bureau of Labor Statistics reported on Friday that the local economy added 850,000 jobs in June beating the market consensus of 700,000, while the unemployment rate unexpectedly ticked up to 5.9% from 5.8%.

The industrial index Dow Jones rallied by almost 13% in 2021 indicating the economic progress, while the technology-heavy Nasdaq Composite is up 14% in the same period, despite the investment rotation from growth to value stock sectors.

The NFP data sent the 10-year US Treasury yields towards 1,43%, hitting 3-month low, while the US dollar retreated from recent highs as the employment rates are not at the level Federal Reserve wants to be, to start tapering its “accommodative” monetary policies.

DXY, 1-hour chart

The DXY-dollar index which measures the dollar against six major peers hit a two-month high of 92,50 last week, driven by the Federal Reserve’s surprise hawkish shift after it signalled two interest rate hikes by the end of 2023.

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