The markets were caught off guard by the amazing jobs report on Friday. US employers added over 2.5 million jobs. Yes, that’s right… 2.5 million jobs! That pushes the unemployment rate down from 14.7% to 13.3%. This news pushed the tech laden NASDAQ to all-time highs of 9,814.
I was never as pessimistic as many of the talking heads on the depression-like job numbers. The virus was not actually the cause of the high unemployment number. The government’s response to fight the spread of the virus was responsible for much of the increase in unemployment. We forced companies to not open and offered considerable unemployment benefits. We also allowed people to not pay their mortgage, their rent (to a lesser degree) and even their student loans. I personally know people making more on unemployment than working. I wasn’t anticipating the unemployment rate to improve until the additional unemployment benefit of $600/week to start burning off in July. I’m happy to be wrong!
We know that opening up the country will increase the number of cases. Let’s pray that the spread of the virus is not as great for the less densely populated areas of the country as it was for New York City. Currently, Arizona is experiencing a large increase in cases and hospitalization.
Top ETF of the Week: iShares Core Small Cap (IJR)
iShares Core Small Capitalized ETF (IJR) invests in companies with a market capitalization of $600 million to $2.4 billion. Small Capitalized Stocks are known for being much more volatile than the bigger cousins S&P 500 ETF (SPY). Companies in SPY must have a market capitalization of at least $8.2 billion. This volatility is demonstrated above as IJR has been the best performing ETF three out of the last five weeks and the worst performing ETF once. Is it too late to jump on board? No. If we are experiencing a “V” shaped stock market recovery the IJR could have another 13.5% to reach its all time high (see below).