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Kevin Matras   
Profit from the Pros
By Kevin Matras
Executive Vice President
Zacks Investment Research

Stocks Closed Higher Yesterday, All Eyes On This Morning?s Employment Report

Stocks closed higher yesterday led by the Nasdaq with 1.28%, followed by the S&P with 0.99%.

Both the Nasdaq and S&P are on pace to close higher for the week. If so, it would be the 6th week in a row for the Nasdaq, and the 3rd week in a row for the S&P. The Dow does not need much to get into the green for the week – just another 0.10%. Just one decent up day away.

We might very well get that today with the Employment Situation report. (More on that in a bit.)

Yesterday's PMI Manufacturing report came in at 48.4 vs. last month's 50.2 and views for 48.5.

The ISM Manufacturing Index slipped to 46.9 vs. last month's 47.1 and estimates for 47.0.

Construction Spending rose 1.2% m/m, beating last month's 0.3% and the consensus for 0.2%. On a y/y basis it was up 7.2% vs. last month's upwardly revised 6.6% pace.

Weekly Jobless Claims rose by 2,000 to 232K. The smoother 4-week moving average came in at 229.50K.

The Challenger Job-Cut report rose to 80,089 vs. last month's 66,995 job cuts.

And the ADP Employment Report came in at 278,000, which was well above the consensus for 160,000 jobs, and only slightly under last month's tally of 291,000. Although, the details of the report were interesting in that it showed large companies (500+ employees) shed jobs (-106K) vs. smaller companies with less than 500 employees adding jobs. In fact, companies with 49 employees or less added 235K jobs, while those with between 50 and 499 employees added 140K jobs.

Nonetheless, if the ADP report is a harbinger of this morning's upcoming Employment Situation Report by the Bureau of Labor Statistics (BLS), then we could be seeing another strong jobs report. The consensus is calling for 190,000 new jobs (165K in the private sector and 25K in the public), while the unemployment rate is expected to tick up from 3.4% to 3.5%.

Of course, the big question is – will a strong report be viewed negatively (more reason for the Fed to keep ratcheting up rates), or will it be viewed positively (underscoring the resilience of the economy and undercutting fears of a recession)? Or will a softer report be viewed negatively (supporting the idea that economic growth will slow even more and possibly lead to a recession), or will it be viewed positively (rate hikes have been working, and no need to raise any further, while opening the possibility of cutting even sooner)?

The report comes out at 8:30 AM ET.

We'll also get Motor Vehicle Sales, and the Baker Hughes Rig Count report.

Should be a busy day today.


Kevin Matras

Executive Vice President, Zacks Investment Research


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