Daily Market Color May 11, 2021Equity Rout Extends Beyond Tech Equities decline on continued inflation concerns Inflation fears once again drove the market action, the rout in equities going beyond tech stocks as 10 of the 11 S&P sectors declined and the DJIA closed down 1.36% (the DJIA’s largest drop since February). Commodities continue to rally led by copper and iron, and crude oil rose as fuel shortages were reported in several U.S. states. Today’s Treasury auction of 3y notes saw good demand with a high yield of 0.329% versus 0.376% from the last auction. Longer-dated yields and swap rates increased for a third straight day with the 10y UST yield closing 2bps higher at 1.62%. Tomorrow, all eyes will be on the latest consumer price index reading. Job openings hit record high U.S. job openings in March rose to a record high with 8.12 million positions available during the month. The month also saw the largest hiring gap on record with vacancies outpacing hires by 2 million. Employers disclosed they are having trouble filling positions due to COVID fears, child-care responsibilities, and competing with unemployment benefits. Small business optimism increases for third straight month The NFIB Small Business Optimism Index increased for the third straight month to 99.8 in April, up 1.6 points from March. The top overall concern for businesses was labor quality with 24% of respondents claiming this as their most important problem. On the inflation front, the net percent of owners that raised average selling prices increased 10 points to 36%. This is the highest reading since 1981 when 42% of owners raised average selling prices.
