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S&P 500 Ends First Half of 2021 at Record; Investors See More Gains Ahead

Stock MarketsJun 30, 2021 04:18PM ET
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© Reuters.

By Yasin Ebrahim

Investing.com – The S&P 500 closed at a record again Wednesday, wrapping up a positive end to the first half of the year following a stronger private jobs report, with investors touting further market gains for remainder of the year.  

The S&P 500 rose 0.20% to a record intraday level of 4,297.32 , and is up more than 15% for the year. The Dow Jones Industrial Average was up 0.61%, or 210 points, the Nasdaq was down 0.17%.

Private payrolls increased 692,000, beating the consensus estimate of 600,000, as the reopening of the economy drove up job gains in leisure and hospitality.

“The services jobs was very strong in the ADP report, which is consistent with the reopening in the U.S.,” John Ragard, senior portfolio manager, small cap equity at Spouting Rock Asset Management told Investing.com in an interview on Wednesday. "Airlines are hiring more pilots, hotel occupancy and hotel rates are increasing […] there's clearly a need for more people to come back into the services sector, especially into the travel and transportation industry.”

The bullish ADP numbers, while not completely correlated with the monthly payrolls report, do bode well for Friday’s jobs report, which will garner added attention following softer reports in April and May. Economists forecast the U.S. economy created about 600,000 jobs in June.

Cyclical stocks, which move in tandem with the economy, were higher, led by energy as oil prices rose ahead of the OPEC meeting on Thursday. Investors are betting that energy demand will outstrip supply ahead of a busy period of travel over the summer months.

“It is emerging that the unexpectedly robust recovery of demand will see a shortfall of up to 2 million barrels per day on the market in the second half of the year,” Commerzbank (DE:CBKG) said in a note.

Financials continued to add to recent gains, with major Wall Street banks trending higher.

Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C), and Morgan Stanley (NYSE:MS) rose more than 1%.

Tech, meanwhile, took a breather from its recent melt-up even as bond yields remained sluggish amid expectations that inflation and growth may have peaked.

Google-parent Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT, Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB) and Amazon.com (NASDAQ:AMZN) were mostly lower.

“The bond markets are telling us that growth is decelerating [amid] some recent inflation data points that have been relatively soft." Ragard said. "I'm not saying that we won't still see some surprising inflation numbers, month to month [...] but I do believe that the growth rates have peaked."

Still, the overall market will continue to grind higher in the second half of the year with greater corporate productivity expected to push earnings higher.

"I think the market will continue to gradually drift higher, driven by the relative strength of company's earnings and cash flows," Ragard said. The pandemic impact and the labor shortage has forced companies to spend money on technology including automation, driving up the productivity gains, which ultimately will boost margins and earnings growth.   

"Companies are finding ways to make capital decisions mostly with technology to get good rates of return on their investment and faster paybacks," Ragard added. "This is enhancing their profit margins and will help to offset some of the headwinds with inflation and the [expected] deceleration of economic growth," Ragard added.

S&P 500 Ends First Half of 2021 at Record; Investors See More Gains Ahead
 

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Comments (15)
Pratt Man
Pratt Man Jun 30, 2021 11:55PM ET
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What an incredible economic recovery President Biden has engineered.
Mitchel Pioneer
Mitchel Pioneer Jun 30, 2021 8:48PM ET
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The fraud and criminal manipulation is on cruise control, as average holdings in retirement plans is criminally inflated to catastrophic levels.  Watch an entire generation get the rug pulled from under their retirement when the US Ponzi Scheme sees it time of reckoning.
King Agamemnon
King_Agamemnon Jun 30, 2021 8:23PM ET
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So "Investors" think there are gains ahead with the P/E ratio on the S&P at 37.4 and climbing?
Pratt Man
Pratt Man Jun 30, 2021 8:23PM ET
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yeah. gdp will grow almost 8% this year.
King Agamemnon
King_Agamemnon Jun 30, 2021 8:23PM ET
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Pratt Man  sounds more like a trade than an investor's time horizon
CHADWICK RICHINGTON
CHADWICK RICHINGTON Jun 30, 2021 7:52PM ET
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The United States of Venezuela
JAMES CUNHA
JAMES CUNHA Jun 30, 2021 7:52PM ET
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With all this cash rolling around, pretty soon it will take on the value of monopoly money.
justin namon
justin namon Jun 30, 2021 7:43PM ET
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Investors may see gains ahead but day traders getting crushed with the algo pumps.
Scott Marcouiller
Scott Marcouiller Jun 30, 2021 7:43PM ET
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Nothing new there....been true since beginning of stock market with or without computers....only here about fraction of 1% that have made big money
Scott Marcouiller
Scott Marcouiller Jun 30, 2021 7:43PM ET
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*Hear
Stan Smith
Stan Smith Jun 30, 2021 6:55PM ET
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Why is there no talk of the disaster taking place in the Repo market: Fed's Reverse Repo Hits Record $992 Billion, Up $150 Billion In One Day?
Joel Schwartz
Joel Schwartz Jun 30, 2021 6:21PM ET
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The overnight reverse repo market just hit $991B. Almost $1T of institutional money would rather park their money with the FED for 0.05% returns than in any paper, digital or physical asset on the planet. I can’t properly express how bearish that is.
Jouni Matero
Jouni Jun 30, 2021 6:21PM ET
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You mean they rather take secured 0.05% return instead of even slightest risk?
Joel Schwartz
Joel Schwartz Jun 30, 2021 6:21PM ET
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Jouni Matero Yes. $1T of money is terrified to do anything, and the FED is enabling them still.
Pratt Man
Pratt Man Jun 30, 2021 6:21PM ET
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repo money eventually flows into stocks. it's like a holding tank for free cash.
New Jazenevd
New Jazenevd Jun 30, 2021 6:03PM ET
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Market gains are inevitable in this environment. Runaway money creation inflates assets, esp. stock market assets.
Leon Kelly
Leon Kelly Jun 30, 2021 6:03PM ET
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Rotating back into banks and cyclicals for july?
New Jazenevd
New Jazenevd Jun 30, 2021 6:03PM ET
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Industrial metals and oil are the best bets in present environment, though strong tide lifts all boats anyway.
Leon Kelly
Leon Kelly Jun 30, 2021 6:03PM ET
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i was noticing how tech surged in june. im thinking they rotate for july
Don Johnson
Don Johnson Jun 30, 2021 5:41PM ET
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I look for earnings to peak this quarter as inflation starts eroding margins throughout the second half of the year. I could be wrong, but the number of companies that are already using the I word in news releases makes me suspect this will be the case.
MK MK
MK MK Jun 30, 2021 5:41PM ET
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No one cares about numbers now. Just buying shares as USD have to drop 70%, fundamentally. The matter I am suprised at the moment is DXY above 40.Obviously this will not happen for at least few years as US backed traitor are in almost each goverment
Michael Dell
Michael Dell Jun 30, 2021 5:20PM ET
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No people in America should go to work,Fed should send checks regularly to everyone in america as long as the rest of the world accepts the dollar and produce goods and services for people in america to buy
Pratt Man
Pratt Man Jun 30, 2021 5:20PM ET
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and billionaires should continue to make billions.. tax free. thanks to trump
Michael Dell
Michael Dell Jun 30, 2021 5:10PM ET
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Fed will buy stock too because Fed has what no one has…The magic printer and keyboard…No people in America should go to work,Fed should send checks regularly to everyone in america as long as the rest of the world accepts the dollar and produce goods and services for people in america to buy
Jouni Matero
Jouni Jun 30, 2021 4:52PM ET
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Who are these (reckless) "investors" who still see gains and buy at this point?
Thuan Bui
Thuan Bui Jun 30, 2021 4:52PM ET
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They bought already at low... they just saying it in the news so the WSB and fomo squad keep buying for them
MK MK
MK MK Jun 30, 2021 4:47PM ET
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Who is going to buy all those shares at this level? History tells us that about 90% do not take profits and loose paper profit
Michael Dell
Michael Dell Jun 30, 2021 4:42PM ET
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Why would any one go to work when Fed should hand everyone monthly checks with few strokes on a keyboard xD
Joel Schwartz
Joel Schwartz Jun 30, 2021 4:42PM ET
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Literally 80% of my unemployed friends are daytrading now. The FED’s loose monetary policies are making people never want to retun to work ever again. And when you make more on 0-DTE SPY calls every other day than bartending tips, it makes sense.
Jouni Matero
Jouni Jun 30, 2021 4:42PM ET
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I hope at least few FED members start thinking they might have created a monster and now it ruins the US stock market and healthy economy, since that's what is going to happen if this goes on
Joel Schwartz
Joel Schwartz Jun 30, 2021 4:42PM ET
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Jouni Matero It’s like an analogy of a town with a casino in it. When the casino starts to pay out more than anyone’s job, who runs the town?
 
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