#5 Daily Financial News Round Up - Nov 5,2021
What news caught my attention?
US Economy added 531,000 jobs as per October Jobs Report. Jobless claims fell down to 4.6% down from previous month’s 4.8%. This is a better than expected report card for the US economy.
How did the markets react?
The stock market indices set new record highs. S&P 500 rose 17.47 points (0.4%) to 4697.53. Dow Jones Industrial Average rose 203.72 points (0.6%) to 36327.95. The Nasdaq Composite rose by 31.28 points (0.2%) to 15971.59.
US Bond markets experienced a flurry of new activity. US government bonds yield fell below 1.5% for the first time in a month after there was a rally in the bonds market as well. What is a yield you ask? Bond yield is the return an investor realizes on a bond. It is the expected earnings expressed in the form of a percentage or interest rate. Yields tend to be inversely proportional to price. When prices rise, yields fall. When demand is higher for bonds, prices rise. The drop in yield is reflective of the increased demand for bonds.
Is college education worth the debt? It depends on the choice of major of the students. Programs that tend to be more technical yield a high return (Yield is not specific to bond markets. Anything that you put time into, when we are calculating if it is worth our effort, you are calculating yield in one form or the other). In contrast, students are in worse financial health when they graduate with creative programs. Engineering, computer science, economics, nursing etc. are technical fields. Creative programs include art, music, philosophy and psychology. Research has shown that technical programs increase a students' lifetime earnings by $500,000 or more.
My Takeaways:
The US economy seems to be doing well with the jobless claims falling to 4.6%. Increased financial markets activity reflects this good news. Inflation concerns still hang over our heads. We need to keep a look out for Next month’s job reports to see if this good trend lasts.
Nothing much has changed since I made my choice of major more than a decade ago. Technical education boosts lifetime earnings at a much greater pace than creative arts. The new empirical evidence on ROI (return on investment) reestablishes this belief.