Market Recap: Friday, May 7

Stocks rose to reach record highs on Friday as investors digested a disappointing April jobs report, which showed the U.S. economy added back far fewer jobs than expected last month despite easing stay-in-place restrictions. The S&P 500 and Dow each reached highs. The Nasdaq advanced, after the disappointing economic data appeared to make a case for monetary policy to stay on hold and interest rates to stay low, supporting tech and growth stocks. Treasury yields steadied after sinking immediately following the jobs report, with the 10-year yield hovering below 1.58%. Belpointe Chief Strategist David Nelson and Bankrate.com Senior Economic Analyst Mark Hamrick joined Yahoo Finance Live to discuss.

Video transcript

SEANA SMITH: Just around two minutes to go until the closing bell. We have David Nelson, Belpointe's chief strategist. Also Mark Hamrick, Bankrate.com's senior economic analyst here to help us break down today's action. But first, let's go over to Jared Blikre for a closer look at some of these movers into the close. Jared, what do you have?

JARED BLIKRE: Yeah, not a bad end to the week here. And let's take a look at the YFi Interactive. We have the Dow up 71 basis points at 7/10 of a percent, 240 points. Looking like it's going to end the week with about 900 points worth of gains, so nice to see that S&P 500 up a little bit more. The outperformer of the day is the NASDAQ. This is over the last five days, up about 9/10 of a percent today. But putting in some losses for the week likely, unless something dramatic happens within the next minute and a half.

But let's look inside the bond market right now because the 10-year T-note yield had a very violent morning after dropping about nine basis points below 1.5%. It then rose, and it reclaimed those losses and now it's up two basis points. So it tells me that there is a floor in here somewhere and that the reflation trade is still quite odd. So maybe some more weakness ahead for some of the mega caps, now, speaking of which, is a mixed picture for them today. We got Alphabet and Facebook in the red.

But besides that, most of these stocks are in the green. Microsoft and Tesla each up over 1%, Nvidia up 2%. We were flagging some of the weakness that we saw in chip stocks. A nice day today, but let's check out the five-day. We are looking at a mixed picture here. AMD is down 3%. That kind of stands out. Skyworks Solutions, they're down a similar amount. But we do have Texas Instruments up about 4%.

Now let's check in on the travel sector on that reopening trade, a lot of losses here. We had a couple of difficult days during the week. This is a five-day heat map that we have going here. You can see Norwegian Cruise Lines, some disappointing news about it not being able to launch in July possibly. You can see up 2% today, but they are down 8.4% for the week. Just checking in on the sector action as we head into the final seconds of trading for the week, energy up 8.7% this week, followed by materials, financials, and industrials.

[BELL]

ADAM SHAPIRO: All right, we've got a closing bell. Let's see where the markets are going to settle for the day. The Dow, the S&P 500, NASDAQ all in the green. The Dow will settle up about 228 points. S&P 500 is going to end the day up about 30 points and well over 4,200 at this point. And then the NASDAQ is going to be up almost 120 points. You just heard Jared talking about sectors. Once again, energy is the sector that did best for the day. It was up almost 2%. The global reopening seems to be [INAUDIBLE] some traction.

Let's bring this to our guests. We have both Mark Hamrick, as well as David Nelson. David, Mark, good to see you. And I want to start with you, David, because this whole concept of the government paying people while they're unemployed possibly keeping them from going into jobs, the greatest sector that saw job growth was hospitality and leisure, up 331,000. Doesn't that undermine the argument that we're paying people to sit home?

DAVID NELSON: I think it's more complex than that. And I think Rick actually earlier just made some pretty good points on this. It is complex. But I look at my home state right here in the state of Connecticut. Some of the casinos like Mohegan Sun, they're offering $2,000 signing bonuses. And they're not getting enough takers out there.

And I think that's a dynamic that's playing out across the country right now. I think right now, I think it's a pretty decent message to the administration to maybe step back, let the economy do its work. And I don't think we need some of the stimulus that's being put out there right now. Obviously, a lot of employers out there need workers. And there's not enough of them.

SEANA SMITH: Mark, how are you viewing it? Do you think some of the stimulus, like David is saying, maybe needs to take a back seat? Or do you still see a need for it right now?

MARK HAMRICK: Well, there's, as you said earlier, Seana, there's a shortfall of 8.4 million jobs to get back to where we were before. And that's dependent on employers being able to ramp up to the degree that they're ready to do that. And that's dependent on the workforce to be available and to step up into those jobs. I liken this to throwing 22 million puzzle pieces up in the air when we lost that number of jobs last March and April. Those puzzle pieces have to be recut.

And what the puzzle looks like from this point on is going to be completely different. There's been so much transformation, innovation, and change in the economy. This economy has seen innovation put on fast forward. And that's going to give us a lot of benefits. It's been, I would say, interesting to see how quickly Republicans and the business lobby has sort of reset to its previous position of, you know, let's try to undo some of the benefits that have been given to people.

But I think that it's much more complex. And I think right now, those benefits are set to go away in September. Much the same as we had paper shortages last year, much the same as we are still selling a lot of automobiles, even with a shortage of computer chips, many of these issues are going to work themselves out in the coming months.

ADAM SHAPIRO: OK, so Mark, if you're talking just to those of us who are average investors, never good to time a market, but in September, a point where you might want to set some-- take my profits before we hit September, or is it a point where you might want to be saying, I need to jump back in when the indexes fall to certain levels?

MARK HAMRICK: Well, it depends on your investment timeline, your appetite for risk, and all those things. So as much as I would like to be able to say there's a one size fits all to that answer, it depends on whether you can let your money ride, to go back to that casino example from a few minutes ago, or whether you might find it prudent to protect some of those winnings. I don't see any reason to head for the hills and buy canned goods in this environment.

We're looking at the strongest outlook for US growth through next year, the strongest levels that we've seen in decades if you look at the forecast for this year and even a decent outlook for next year. And if we have to throw some of that growth at a lower level this year into next year, that's probably even better. And that's one reason, by the way, it's prudent for elected officials to think about the long-term growth prospects for this economy. And not only on the short term, even though kicking the can in Washington is the national sport.

SEANA SMITH: David, when you take a look at the markets, clearly shrugging this off. We had new records today for the Dow and the S&P. When you take a look at what could potentially be a risk here for the market going forward, what's your view on that? Anything that you see on the horizon that could potentially stop this momentum?

DAVID NELSON: There's a couple of risks. Certainly the elephant in the room is certainly rates. Each stairstep higher in rates kind of challenges the bull thesis. I think we have about 100 basis points of headroom before fixed income becomes competitive at all. And then maybe the bigger risk that doesn't get talked about enough is China. They're an adversary in every sense of the word. And I expect the-- I expect China to test the Biden administration on several levels, certainly, economically, foreign policy.

And now with what we've seen with these incursions into the air defense zone of Taiwan and what that could mean for us, it could be militarily as well. It's a dynamic that plays out each and every day. Every corner of the globe is still a geopolitical hotspot. But these are the major issues that the Biden administration is going to have to deal with in the coming months.

ADAM SHAPIRO: David, just following up on that, are you predicting a black swan event if China were to make some kind--

DAVID NELSON: No.

ADAM SHAPIRO: --of move against that?

DAVID NELSON: By definition, a black swan event is something I can't predict. But I think, you know, there's going to be a push from a lot of economies around the world, in some ways, to decouple with China. You're even seeing talk like that in places like Europe, which was very friendly to China for most of the last couple of years. It's a dynamic that's playing out worldwide as they push ever more into their mindset, their 25-year plan. It's a challenge for us, and we're going to have to meet it head on.

SEANA SMITH: All right, let's get over to Jared Blikre quickly for his final thoughts here. Jared. Jared, it looks like you might be muted.

JARED BLIKRE: The retail trader is back. And it looks like retail traders since GameStop have lost $175 billion, although they head at the bottom. But they've reclaimed about $125 billion. And it makes me think, what about Dogecoin? That is the people's coin. And we've got the ultimate champion of the people's coin. That would be Elon Musk, heading to Saturday Night Live this Saturday. And guess what? I'm betting that Dogecoin might see a rally. Maybe a dollar, a dollar a Doge? We'll be talking about it Monday. Guys.