Non Farm Payroll lifts US Market or Kill it?
04 April 2024.
On Thursday, US stocks slumped as:
Oil hit its highest price in 6 months.
Key Federal Reserve official floated a “mood dampening” warning that spooked the market, thoroughly.
When market called it a day:
DJIA: fell -1.35% (-530.16 to 38,596.98).
S&P 500: fell -1.2% (-64.28 to 5,147.21), marking S&P index worst single-day drop since 13 Feb.
Nasdaq: slipped -1.4% (-228.38 to 16,049.08).
Fed Reserves - Bad cop.
The US market was actually trending higher on Thursday. (see above)
All 3 major composite indexes took a turn for the worse after midday.
After Minnesota Fed President Neel Kashkari mooted that the Fed may not cut interest rates at all in 2024, if inflation progress stalls. (see below)
The “callous” comment was even more damaging than Fed President Bostic’s comment on Wed, 03 Apr 2024, that there might be just 1 interest cut in 2024. (see below)
Prior to Kashkari's comments, the market had shaken off a rough start to Q2 2024 — after Fed Chair Jerome Powell soothed concerns the Federal Reserve would lose its nerve for making rate cuts.
All eyes are now the March jobs report, out Fri, 05 Apr 2024 morning.
This is the key economic input for the Fed's data-dependent policy decision-making. (see below)
US Non Farm Payroll - Estimates.
The March jobs report is expected to show some signs of cooling in the labour market after 2 months of robust job gains that shocked Wall Street to start the year.
According to Bloomberg, below are the key numbers Wall Street will be looking at (compared to previous month):
Nonfarm payrolls: +213,000 vs. +275,000 previously
Unemployment rate: 3.8% vs. 3.9% previously.
Avg hourly earnings, MoM: +0.3% vs. +0.1% previously.
Avg hourly earnings, YoY: +4.1% vs. +4.3% previously.
Avg weekly hours worked: 34.3 vs. 34.3 previously.
The latest non farm payroll (NFP) report is a test for US job market.
On the one hand, investors are looking for signs that things are slowing down.
On the other, they still hope it stays strong enough for Central Bank to commence interest cut.
A strong job market is important because it helps US economy avoid a recession.
Rounding off, Bank of America, Economist Michael Gapen said:
March NFP should re-anchor expectations for a cooling labor market.
And not one that is showing significant signs of weakness.
Overall, Wall Street analysts do not expect to see any sign of cracks in the strong US labour market story.
Department of Labor data released on Thu, 04 Apr 2024 morning. (see above)
Data showed initial jobless claims rose by +9,000 to 221,000 on the week ending 30 Mar 2024.
It is the highest level since January 2024.
It is higher than Wall Street expectations of 213,000 by +8,000.
According to Oxford Economics lead US economist Nancy Vanden Houtenremain:
Latest data is still below the level that would signal a significant weakening in labour market conditions.
More importantly, the claims data and other labor market indicators are consistent with a job market that is still quite healthy.
In my earlier post — Jobs & Fed's Good Cops Raised US Market ? (click title to read) I have dollar-cost-average into $SoFi Technologies Inc.(SOFI)$.
In the event that NFP report cause the market to tumble further, it might be an opportunity to add to my holdings.
If the reverse happens, then will wait for the next opportunity.
I invest in my comfort zone.
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