From the Desk - Economic Commentary
Scott Hofer, Member Strategies Manager - 5/6/2026
U.S. equities opened sharply higher this morning with all three major indexes climbing by at least 0.7% as oil prices recede and corporate earnings continue to post strong results. The biggest catalyst is renewed optimism around a potential U.S.–Iran agreement, which has pushed oil prices significantly lower and eased inflation concerns, helping both equities and bonds rally. At the same time, strength in the semiconductor and AI trade has led the market higher. Investors are also reacting to a solid but not overheating labor signal from the latest ADP jobs data, reinforcing a “soft landing” narrative. Overall, the move reflects a broad “risk-on” shift fueled by falling yields and energy prices, upbeat earnings, and continued confidence in AI-driven growth.
In economic data releases today, the ADP National Employment report showed private-sector employment increased by 109,000 jobs in April, coming in modestly above expectations and marking the strongest gain since January 2025. Hiring was driven by the education and health services sector (+61,000) along with gains in trade/transportation, construction, and financial activities, while professional and business services posted a decline. Job creation was concentrated among small and large firms, with weaker hiring in mid-sized companies, highlighting uneven momentum across the labor market. Wage growth cooled slightly, with pay for job-stayers rising 4.4% year over year and job-changers seeing steady gains around 6.6%. Overall, the report suggests a stable but subdued “low-hire, low-fire” labor market, where hiring is improving modestly but remains concentrated in a few sectors and firm sizes.
In housing finance, mortgage applications declined 4.4% week over week in the latest MBA survey for the week ending May 1, extending the prior week’s drop as borrowing costs increased. Mortgage rates moved higher, with the average 30 year fixed rate rising to about 6.45%, the highest level in roughly a month, which weighed on overall demand. Refinance activity fell around 5% on the week, while purchase applications declined about 4%. The pullback reflects reduced refinance incentives and ongoing affordability pressures for buyers, particularly as higher rates discourage first-time and lower-price-point demand. Overall, the data signal a rate-sensitive housing market where rising yields are cooling near-term activity, even as underlying purchase demand remains somewhat stronger than a year ago.
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