Market Overview

Markets Don't Like Payroll Miss


The markets turned deeper to the downside early Friday after the government released the all-important employment numbers, revealing that nonfarm job growth is slowing, but gave the Federal Reserve a whiff of something it’s been looking for: inflation.

Some 160,000 nonfarm jobs were created in April, falling well short of Wall Street’s expectations of 202,000, according to Thomson Reuters. That is the lowest number since last September, when only 149,000 jobs were added. Is there a silver lining? Average hourly wages inched up 0.3%, indicating a 2.4% year-over-year gain. That points to inflation growth that the Fed Reserve has been looking for to hike interest rates.

The bulk of new jobs came from the private sector in professional and business services, healthcare and financials. The government was the culprit in job losses as was the mining industry. Jobs numbers from both February and March were revised downward, but unemployment stood still at 5%.

Ahead of the report on Thursday, the markets appeared to be much ado about nothing. All three major benchmarks looked like they were going to snap multi-day losing streaks at the start of trading. But alas, by midday they were treading in negative territory before ending the session as flat as pancakes with moves of less than 0.20% on all three. The Dow Jones Industrials (DJIA) managed to tiptoe into positive territory while the S&P 500 (SPX) and Nasdaq (COMP) couldn’t. SPX’s move was so tiny, it hardly registered and kept the index at the 2,050 support level. COMP logged its 10th day in the red in 11 sessions.

A Canadian wildfire that province officials called “out of control” fueled Thursday’s early rise as the S&P energy index led advancers. Oil prices gave up their early gains but still mastered as the leaders, with the energy index up 0.7%.

The yield on the 10-year U.S. Treasury note fell yesterday to 1.75%, hitting yet another trough in two weeks.

When Hawks Fly. Some Federal Reserve hawks were fluttering above the Hoover Institution’s annual monetary conference in San Francisco Thursday and sat down separately with CNBC. Atlanta President Dennis Lockhart, who has consistently spouted a hawkish message about raising interest rates more than once this year, called Q1’s tepid growth “an anomaly” that won’t be repeated in the remaining three quarters. Though he has said that he could support a June rate hike, on Thursday he noted that it will hang on economic numbers. “I’m very much at the moment…on the fence, and it will depend how the data come in,” he said. San Francisco President John Williams also chatted about data dependence, noting that it’s a “reasonable view” that there could be two or three rate hikes yet this year.

What Do the Fed Funds Futures Say? No way, or at the least, little way considering the CME Group FedWatch tool has a mere 9% probability of an increase at the Fed Reserve’s June meeting. The probability factor doesn’t even peek above 50% until December—after the presidential elections—and it’s only at 51%. But remember this: Janet Yellen is the boss lady and whatever she thinks, no matter what other Fed members or futures might think, is what goes.

Facebook 0, The People 1. A judge gave a thumbs down to Facebook’s (FB) efforts to have a court case about the use of the company’s biometric data tossed. The suit alleged that the social network’s face recognition tool “unlawfully” collected and stored biometric data from photos on the site.


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Posted-In: News Events Econ #s Economics Federal Reserve Markets Analyst Ratings


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