Mish's Market Minute

Why Jobs Growth Could Make or Break the Current Market


The jobs market is growing, with more companies offering higher wages and increased benefits. For instance, Walmart (WMT) increased its average minimum wage to $16 an hour and has a program to pay for worker's tuition at a four-year college. Many other companies have followed suit with increasing wages and up-front bonuses.

The strong surge in wage increases shows that companies are having trouble enticing people back to work. However, now that unemployment benefits are set to end soon, will more people enter the workforce, or have people found other ways to make a living?

Since the beginning of the pandemic, people have been forced to get creative with their finances. Moving in with relatives or friends, many people consolidated their lifestyles, while others moved to different cities looking for work or to get away from highly populated areas.While we have seen a housing boom and a shift in stay-at-home workers, now we are having an inverse job situation with companies feverishly looking for more labor.

Some speculate a shortage of workers comes from extended unemployment benefits which are set to end soon. If this is true, we could see a wave of new jobs in the coming employment reports. With that said, others believe the market rally from pandemic lows has allowed investors and traders to make large amounts of money through active trading and cryptocurrencies, thus giving more people the freedom to wait for better jobs.

While it is tough to nail down any single reason for slow job growth, we know that if job growth doesn't increase, it could hurt the current market. On top of that, inflation worries could increase due to fewer workers creating stocking, shipping and manufacturing shortages. Though we are rooting for increased jobs numbers, we also need to understand that increased inflation and lack of workers could create a stagflation type of market environment.

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ETF Summary

  • S&P 500 (SPY): Holding near highs.
  • Russell 2000 (IWM): Needs to hold support at 225.
  • Dow (DIA): 351 support and from the 50-DMA at 350.
  • Nasdaq (QQQ): minor support the 10-DMA at 378.25.
  • KRE (Regional Banks): Needs to stay over 66.
  • SMH (Semiconductors): 271 support area.
  • IYT (Transportation): 247.77 main support the 200-DMA.
  • IBB (Biotechnology): 177.37 high to clear.
  • XRT (Retail): Needs to get over 97 and hold. 91.49 support.

Forrest Crist-Ruiz


Assistant Director of Trading Research and Education

Mish Schneider
About the author: serves as Director of Trading Education at MarketGauge.com. For nearly 20 years, MarketGauge.com has provided financial information and education to thousands of individuals, as well as to large financial institutions and publications such as Barron’s, Fidelity, ILX Systems, Thomson Reuters and Bank of America. In 2017, MarketWatch, owned by Dow Jones, named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish was the winner of the Top Stock Pick of the year for RealVision. Learn More
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