Not too hot, not too cold. The economy is enjoying a “Goldilocks” moment again. Wall Street’s favorite heroine has returned to center stage and investors are applauding.

U.S. job gains are coming in strong, indicating that the economic recovery will maintain sufficient momentum heading into the second half of 2021. However, there’s still plenty of slack in the labor force, which should keep a lid on inflation and preclude interest rate hikes by the Federal Reserve.

After two straight months of payrolls falling below expectations, jobs data last week delivered a positive surprise, helping stocks soar to new record highs.

The Bureau of Labor Statistics reported Friday that the U.S. economy added 850,000 jobs in June, the most in 10 months and exceeding the consensus estimate of 706,000. About 40% of the gains came from leisure and hospitality, the sector clobbered the worst by the pandemic.

Wages rose for the third straight month, a sign that workers have leverage in the pandemic-wounded economy and they’re demanding better pay and working conditions.

However, the headline unemployment number ticked higher to 5.9% as labor force participation held steady. The share of the working-age population active in the labor force was unchanged at 61.6%, which means that millions of workers who became unemployed during the pandemic have yet to return.

The slight increase in the unemployment rate is nothing worrisome. Americans are quitting or retiring at growing numbers and many workers who were laid off during the pandemic aren’t returning, which further justifies the Fed’s inclination to stand pat on monetary policy.

The most recent Labor Department report showed that open positions in April soared to a record 9.3 million. That’s enough to soak up the entire shortfall in jobs since the pandemic started in early 2020.

The often cited notion by some pundits that enhanced unemployment benefits have been a disincentive for workers to return to work isn’t supported by the evidence. In states where those benefits were terminated, sidelined workers for the most part still aren’t accepting open positions. Fact is, the pandemic has prompted millions of workers who saved a lot of money to reevaluate their lifestyle choices.

Regardless, this imbalance in the jobs market is likely to smooth out as the summer unfolds and consumers spend in earnest on travel and recreation. The latest consensus of economists is for U.S. gross domestic product (GDP) growth in the second quarter to approach a stunning 10%.

Hard-hit sectors are climbing back. Notably, the U.S. Transportation Security Administration reported Friday that it screened nearly 2.2 million people nationwide Friday, for the highest travel throughput since the initial coronavirus outbreak.

Read This Story: Fed Tapering: Nothing to Fear…Yet

As economic activity heats up, the biggest risk to equities right now is Fed tightening, but the persistent slack in the jobs market puts that fear to risk, for now.

That championship season…

These days, watching the stock market is like watching my beloved baseball team the Boston Red Sox. As of this writing Tuesday, the Sox are 4.5 games ahead in first place in the AL East and they’re racking up win after win. As the following chart shows, the major U.S. stock market indices are on a roll, too.

Wall Street was cheered by the latest jobs report and stocks closed sharply higher on Friday, to close out a winning week. Oil prices jumped, too (see chart).

During the first half of 2021, stocks performed like champs. For the first six months of the year, the Dow Jones Industrial Average gained 12.7%, the S&P 500 gained 14.4%, and the tech-heavy NASDAQ gained 12.5%. The S&P 500 posted its second-best first-half performance in more than 20 years.

Read This Story: Mid-Year Review: Where Are We Going?

For the second half, the top three performers were energy (45.1%), financials (25.5%), and real estate (23.3%). I expect these cyclical sectors to continue leading the pack as the economic recovery picks up steam.

It adds up to a boom in commodities. The world is clamoring for vital raw materials, such as copper, zinc, lithium, and rare earth minerals. As economic growth accelerates in 2021, these commodities should continue soaring in price. Commodities also serve as time-proven inflation hedges.

I’m especially keen on the economically sensitive raw material of copper. For our favorite copper mining play, click here now.

John Persinos is the editorial director of Investing Daily. Send questions and comments to: mailbag@investingdaily.com. To subscribe to his video channel, follow this link.