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On Markets, Jobs, Productivity & Inflation (in Under 500 Words)

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We reported pre-market futures were in positive territory ahead of today’s opening bell, but we cited a clear downward trajectory that may have seen the major indices dive into the red. This did indeed happen, though it seemed to be enhanced by lower-than-expected results from February’s JOLTS report, which showed the fewest number of open jobs in nearly two years; the immediate reaction was for market participants to sense a hard economic landing may be imminent.

The Job Openings and Labor Turnover Survey (JOLTS) reached 9.9 million job openings for February, still historically high but the lowest number we’ve seen since May of 2021. Just two prints previous — December 2022 — posted more than 11.2 million openings, and going back a year — to March 2022 — we had breached 12 million unfilled jobs. For this latest read, -278K of these came from Professional/Business Services, -150K from Healthcare/Social Assistance and -145K from Transportation. The biggest-gaining sector for the month was Construction, at +129K.

Factory Orders, also for February, hit the tape after today’s open, and also performed lower than expectations: -0.7% on headline was a deeper cut than the estimated -0.5%, from a big downward revision for the previous month: -1.6% originally reported to -2.1% this morning. These follow yesterday’s lower-than-expected ISM Manufacturing numbers — another sign that the economy seems to be deflating in demonstrative ways. Tomorrow brings us ISM Services numbers; will we continue to see these figures come down precipitously?

Tomorrow morning also brings us results for March from Automatic Data Processing (ADP - Free Report) , which is expected to post 210K new jobs filled in the private sector last month, down from the 242K brought in the previous month, which was a bounce-back from low January totals of a cycle-low 119K. Over the past 6 months, ADP’s monthly average is 212K private-sector jobs gains — basically what tomorrow’s guide is. Go back two years, and that figure more than doubles: 434K per month. This helps illustrate how the labor market — in the private sector, at least — has already slowed from the Great Reopening.

In any case, the fever rally appears to have broken for the time being: the Dow, which had gained +3.5% over the previous five trading days, was -200 points, -0.60% for the session. The S&P 500 snapped a four-day winning streak, -0.57%. The Nasdaq has now replaced its bullish trend with two straight down days, was -0.50%, and the small-cap Russell 2000, which fell way off the pace of the other major indices earlier than the econ data releases, finished the day -1.82%.

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