The S&P 500 rose 1.2 percent last week to a record high.
US stocks gained despite a disappointing US April employment report on Friday.
Some analysts attributed the rise in stocks to the expectation that the Federal Reserve will be likely to maintain easy monetary policy.
“It certainly takes the pressure off the Fed and takes an imminent rate increase off the table,” said JJ Kinahan, chief market strategist at TD Ameritrade. “We’re not going to see inflation in wages, and we don’t have as many people employed as we thought, so we have to keep the party going.”
However, other analysts think that the weaker-than-expected job growth was due to a shortage of labour supply, which would not be responsive to monetary policy.
“I think this is just as much about a shortage in labor supply as it is about a shortage of labor demand,” said Jason Furman, an economist at Harvard University and a former Obama administration advisor. “If you look at April, it appears that there were about 1.1 unemployed workers for every job opening. So there are a lot of jobs out there, there is just still not a lot of labor supply.”
That is a view shared by Mohamed El-Erian.
Indeed, when asked whether he thinks the Fed should begin tapering monetary easing despite the jobs report, El-Erian replied: “I do. Because I think that this is a supply issue and not a demand issue. And I really worry about financial instability, and I worry about unanchoring inflationary expectations.”
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