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Market indexes began the day with its mind made up: some of the gains over the past two-and-a-half weeks were being cashed in, at least for today. And, while coming off the lows an hour ahead of the close, followed suit by the afternoon bell: the Dow dipped 66 points, or -0.19%, the S&P 500 was -29 points, -0.63%, the Nasdaq gave up -177 points, -1.21%, and the small-cap Russell 2000 fell 43 points, -1.97%.
Perhaps we’re getting a bit long in the tooth regarding the markets’ post-Fed relief rally: after having priced in some question marks whether or not a 50-basis-point hike was going to be in the cards mid-month, stocks rallied higher on the news of a 25-basis-point hike. Shares of Apple (AAPL - Free Report) , for instance, gained more than 9% subsequently, prior to today’s -0.66%, which broke an 11-day winning streak.
Indexes have also been responding favorably — and speedily — to any notion that peace negotiations between Russia and Ukraine may be gaining ground. However, bombs are still dropping in various regions of Ukraine, and the Russians have not exactly earned the trust of the rest of the world of late. Today, we’re back to “stocks go lower/oil goes higher” with WTI and Brent crude prices back up around +3% today.
The curve between bond yields on the 2-year and the 10-year has grown ever slimmer: now -0.02%. It looks more certain than even an inversion is in the cards near term, and with it an expected narrative in financial news media that a recession is headed our way. This has not held much sway over the past 2+ weeks of bullishness, but may generate a perceived headwind by traders going forward, however.
That said, Zacks Chief Economist John Blank is “agnostic” on the concept that a recession will be ushered in upon the inversion of the yield curve. “The bond-buying magnitudes — here, and in Europe and Japan — have completely unjoined the prior logic that held that story together,” he said. “No idea what it means now, other than faster Fed Funds rate hikes to a now more open ‘neutral rate’ and 2.5 to 3.0%. Beyond that, forget the prior thinking.”
What we’re seeing in employment data has been heartening: today’s 455K new private-sector jobs reported by ADP (ADP - Free Report) further illustrates the robust domestic labor force, now several weeks removed from the peak of the Omicron variant of the Covid pandemic. Tomorrow morning, we see if last week’s 52-year low on Continuing Jobless Claims continues, and if new claims can improve on the cycle-low 187K we saw last week.
On Friday, the biggest jobs data of the month comes out, with nearly another half-million new jobs having been created in the month of March expected. The Unemployment Rate last month dropped to 3.8%, and expectations are for this to tick down further for the present month. Wage growth will be a closely-watched element of this report — is the overall narrative of getting back toward full employment also allotting wage gains at the lower end of the spectrum? If so, this will be more good news.
So today may be the beginning of a slide back toward mid-March levels, as myriad economic issues continue to push and pull market sentiment. Or, we may be seeing something a little stronger economically than those fretting runaway inflation, stagflation, etc. have led us to believe. Following these employment reports, we are poised for a fresh look at Q1 earnings season. In other words, we’re likely to become more “data-dependent” for the next few weeks of trading.
Image: Bigstock
Markets Give Back, but Off Session Lows
Market indexes began the day with its mind made up: some of the gains over the past two-and-a-half weeks were being cashed in, at least for today. And, while coming off the lows an hour ahead of the close, followed suit by the afternoon bell: the Dow dipped 66 points, or -0.19%, the S&P 500 was -29 points, -0.63%, the Nasdaq gave up -177 points, -1.21%, and the small-cap Russell 2000 fell 43 points, -1.97%.
Perhaps we’re getting a bit long in the tooth regarding the markets’ post-Fed relief rally: after having priced in some question marks whether or not a 50-basis-point hike was going to be in the cards mid-month, stocks rallied higher on the news of a 25-basis-point hike. Shares of Apple (AAPL - Free Report) , for instance, gained more than 9% subsequently, prior to today’s -0.66%, which broke an 11-day winning streak.
Indexes have also been responding favorably — and speedily — to any notion that peace negotiations between Russia and Ukraine may be gaining ground. However, bombs are still dropping in various regions of Ukraine, and the Russians have not exactly earned the trust of the rest of the world of late. Today, we’re back to “stocks go lower/oil goes higher” with WTI and Brent crude prices back up around +3% today.
The curve between bond yields on the 2-year and the 10-year has grown ever slimmer: now -0.02%. It looks more certain than even an inversion is in the cards near term, and with it an expected narrative in financial news media that a recession is headed our way. This has not held much sway over the past 2+ weeks of bullishness, but may generate a perceived headwind by traders going forward, however.
That said, Zacks Chief Economist John Blank is “agnostic” on the concept that a recession will be ushered in upon the inversion of the yield curve. “The bond-buying magnitudes — here, and in Europe and Japan — have completely unjoined the prior logic that held that story together,” he said. “No idea what it means now, other than faster Fed Funds rate hikes to a now more open ‘neutral rate’ and 2.5 to 3.0%. Beyond that, forget the prior thinking.”
What we’re seeing in employment data has been heartening: today’s 455K new private-sector jobs reported by ADP (ADP - Free Report) further illustrates the robust domestic labor force, now several weeks removed from the peak of the Omicron variant of the Covid pandemic. Tomorrow morning, we see if last week’s 52-year low on Continuing Jobless Claims continues, and if new claims can improve on the cycle-low 187K we saw last week.
On Friday, the biggest jobs data of the month comes out, with nearly another half-million new jobs having been created in the month of March expected. The Unemployment Rate last month dropped to 3.8%, and expectations are for this to tick down further for the present month. Wage growth will be a closely-watched element of this report — is the overall narrative of getting back toward full employment also allotting wage gains at the lower end of the spectrum? If so, this will be more good news.
So today may be the beginning of a slide back toward mid-March levels, as myriad economic issues continue to push and pull market sentiment. Or, we may be seeing something a little stronger economically than those fretting runaway inflation, stagflation, etc. have led us to believe. Following these employment reports, we are poised for a fresh look at Q1 earnings season. In other words, we’re likely to become more “data-dependent” for the next few weeks of trading.
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