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Macro View

The market managed to recoup its April losses in the last couple of weeks to finish the month essentially flat. As a result, it is starting May with the impressive gains from the October lows essentially intact. That said, I would expect stocks to remain in a tentative mood ahead of the all-important April Jobs Report on Friday.

We do have a heavy schedule of reports on deck for release a little later today, with the April Manufacturing ISM survey as the most significant one. Regional manufacturing surveys in the lead-up to today’s ISM reading have been showing some loss of momentum in the industrial sector, with Monday’s Chicago PMI coming up short as did the Empire State and Philly Fed surveys earlier. The headline ISM level is expected to come down from March’s 53.4 level, but it will be interesting to see the employment component given the recent strength in manufacturing jobs.

Beyond today’s spotlight on the manufacturing sector, the focus the rest of this week will be the labor market, with the April non-farm payroll report coming out Friday morning. The expectation is for a roughly 165K reading for total gains and a bit higher number for private-sector jobs.

Most of the labor market indicators have been showing softness since the negative jobs surprise last month, hurting the emerging narrative of a labor market turnaround. The Friday reading will confirm whether the March miss was one-off event due to seasonal factors or the start of a new round of slowdown along the lines of what we saw around this time in the last two years. I believe it’s the former, but we will find out for sure only on Friday morning.

Of this morning’s very busy earnings schedule, Pfizer (PFE - Analyst Report) and Archer Daniels Midland (ADM - Analyst Report) managed to eke out earnings beats on modestly lower than expected revenues. Avon Products (AVP - Analyst Report) came short of earnings and revenue expectations. We have Motorola Mobility (MMI) and CBS Corp. (CBS - Analyst Report) reporting after the close today.

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