Stocks advanced on Friday, with blue-chip and technology benchmarks vaulting to new record highs, as Wall Street continued to price in expectations of a booming economy as the first quarter earnings season kicks off. Wells Fargo Senior Economist Sarah House and Polaris Wealth Advisory Group Jeff Powell joined Yahoo Finance Live to discuss.

Video Transcript

EMILY MCCORMICK: Welcome back to Yahoo Finance Live. I'm Emily McCormick in for Adam Shapiro. We're minutes away from the closing bell on this final day of trading in a record-setting week on Wall Street. And let's bring in our panel to discuss the markets this afternoon. We have Sarah House, Wells Fargo senior economist, and Jeff Powell, managing partner and chief investment officer at Polaris Wealth Advisory Group, here with us. But first, we want to toss it over to Yahoo Finance's Jared Blikre for one final look at the markets. Jared, what are you watching in these last minutes of trading?

JARED BLIKRE: I'm watching a surge of trading in the final minutes here. And let's check out the price action on the charts. Dow still leading, up 8/10 of a percent. But look at this, just accelerating into the close, up 275 points right now. But the NASDAQ is the real comeback story of the day. You can see it started out in the red, and now it, too, is getting a pop as we speak. Well, let's take a look inside the market here. But before we do it, actually, let me just go here. This is the NASDAQ 100, all right? And we don't quite have a yet record intraday high just yet. But we do have the potential for a record closing high. It looks like that's going to happen here.

And we talk a lot about the NASDAQ having lagged and not being able to reach its record highs. Well, there's the NASDAQ 100. Pretty impressive week. And just for a review of what happened inside the NASDAQ this week, let's go to that five-day view once again because the winnings are mounting here. Apple now up 8%, Microsoft up 5%, Alphabet and Amazon, 6%, Facebook, 4 and 1/2%. So, all right there. And if you take a look at the sector action, still seeing tech adding to its winnings for the week. Energy still the biggest laggard here. We'll quickly check out what energy has done for the day, not necessarily the week. But here's today, yeah, definitely giving back a lot of those gains.

But also checking in on the travel sector, a mixed session today, Carnival up 2 and 1/2%, but we did have some big gains earlier in the week. And we can see that reflected here. We got Norwegian Cruise Lines up 10%, lots of excitement over cruise lines finally reopening in the US potentially in July, although they still are arguing with the CDC on exact guidance here.

Well, we got to check in on the EV space because we have Tesla up 2% for the week. GM, traditional automaker, up 4%, Ford up 3%. And that's despite all those closures that have been announced because of that chip shortage. Here's the closing bell on Wall Street, the final one of the week.

[BELL]

SEANA SMITH: And that does it for the trading week. Again, stocks hitting record highs as we see some buying here into the close. The Dow closing up just around its highs of the day, I believe, up 299 points. S&P up 31 points and NASDAQ up about a half of a percent. The NASDAQ 100, what Jared was just talking about, hitting a record close. The sector action today, we're seeing consumer discretionary, industrials, healthcare, technology among the winners today.

Seven of the 11 S&P sectors, it looks like, are going to close in the green today. Technology and consumer discretionary on a weekly basis are the big winners. Well, we want to bring in our panel. We have Sarah House and Jeff Powell. They have been standing by. And Jeff, let's just get to the action that we've seen this week, technology, consumer discretionary leading the way. Are you finding opportunity in any of those sectors?

JEFF POWELL: Yeah, of course. I mean, we're really big believers in what we're seeing within the chip manufacturers, in particular, and the equipment manufacturers. But then technology within consumer discretionary, you really have a lot of stuff going on there. You were already kind of hitting on the cruise lines, so you've got a lot of consumer discretionary. Areas like GM, Ford, the cruise lines, Carnival Cruise Line, that are doing quite well here. A lot of it is the leisure area of the market that's recovering within consumer discretionary with a lot of pent-up demand that, as we see a continuation of our opening of our economy, we think that we'll continue to see great strength in this area.

EMILY MCCORMICK: And Sarah, I want to send it over to you because it looks like investors have been a little bit less concerned about inflation than they had been in the past couple of weeks. We just got that stronger than expected Producer Price Index print out this morning. We're getting CPI out next week. What are you seeing in terms of the trajectory of inflation for the rest of this year? And when are we going to start to see some of those big year over year spikes?

SARAH HOUSE: Well, I think we're already starting to see the year over year spikes. We certainly saw that with the March PPI print this morning. But I think it is going to remain strong through this year because you not only have the easy base effects from last spring, but of course, we have this reopening fueled price increases more recently as well. And so that's going to keep those year over year rates elevated for some time.

So, looking at the CPI, which, as you mentioned, we get next week, so we think that the headline there can climb to probably 4% year over year by sometime this spring. The core CPI can even run closer to 3% sometime this summer. And probably your core PC deflater, which is what the Fed's really focused on, that's going to remain above 2%, probably somewhere closer to 2.3% on into to early next year. So overall, still pretty strong near-term profile for inflation.

SEANA SMITH: Jeff, what are you anticipating when it comes to inflation?

JEFF POWELL: You know, I think that Ms. House kind of hit it on the head with regard to seeing future numbers there. I mean, obviously, the Fed futures numbers don't look like the Fed will make much of a move within it. Obviously, we've seen a astronomical move up in the 10-year Treasury over the last six months to the point where you saw the second worst quarter that we've seen in the 30-year Treasury in its history. So, to us, I mean, we're really a little bit concerned about what's going on in intermediate and long-term fixed income. We don't see it as a particularly great place to be involved with when you're in a zero interest rate environment with really only one direction for rates to go but up.

EMILY MCCORMICK: And Sarah, I want to ask a little bit about the other side of the Fed's dual mandate, of course, with employment. And, you know, we had a stronger than expected March jobs report, although we have been seeing some of that high frequency data and that initial jobless claims come in a little bit choppy the past two weeks. What's your outlook in terms of employment? And when do you see the economy recovering those nine million or so jobs that we're still short of from pre-pandemic levels?

SARAH HOUSE: Right, so I think the jobless claims numbers over the past couple of weeks, that's really been the outlier in terms of labor market data. So you mentioned the strong jobs report we saw last Friday. On Tuesday of this week, we saw job openings move above their pre-COVID peak. And, really, indications point to a continued improvement in the labor market.

So we think that we're going to get another run of very strong jobs numbers in terms of payrolls over the next couple of months and in terms of the overall recovery for non-farm payrolls. So we're looking for that to happen probably sometime in the second half of next year. So it's a pretty quick recovery when you think about just the fact that the recession didn't really start till last February. And of course, it was as deep as it was.

Now, a full recovery in employment doesn't quite mean that the labor market is back to where it would be. And so, for example, we still have the unemployment rate above 4% by the end of next year. And that's likely to keep the Fed in a very patient mode and keep them from holding off on raising rates through a forecast horizon of 2022, even as you do see inflation pick up.

SEANA SMITH: Jeff, higher corporate taxes, the market seems to be shrugging it off. We haven't seen much reaction to that so far this week. Why do you think that is?

JEFF POWELL: Well, I mean, first of all, I don't think that we have a certainty of having a higher corporate tax. I mean, there's a lot that's still being-- trying to be smoothed out where rates might go. In addition to that, with the amount of stimulus that's being thrown towards certain segments of the marketplace, I think that a lot of people are looking at not only GDP growth, but corporate earnings growth being substantially higher over the course of the next couple of years to more than offset any kind of corporate tax increase that might be coming down the road.

EMILY MCCORMICK: All right, thank you so much, Sarah House, Wells Fargo senior economist, and Jeff Powell, managing director and chief investment officer at Polaris Wealth Advisory Group. Well, we want to bring in Yahoo Finance's Jared Blikre with one final look at the market this week. Jared, what's your final word?

JARED BLIKRE: I'll tell you what. I'm looking ahead to next week. We got a lot of excitement and things happening. We've got the Coinbase IPO that's slated for Wednesday. But also, we just got word overnight and later this afternoon that DiDi, the ride hailing service in Asia, is filing confidentially to IPO in the US. And they could have a valuation of $70 to $100 billion. That is a mega coin. So the IPO space fared fairly well this week. We didn't have a lot of issues coming out, but a lot in the pipeline, especially a lot of big names.