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Another Sloppy Stock Day as Jobs Report, Long Weekend Loom?

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April 2, 2015

Yes, yesterday’s close marked a back-to-back drop and the sixth lower finish out of the past eight sessions. But the remarkable aspect of Wednesday’s session was the late-day claw back, enough to land the S&P 500 (SPX) above the closely watched 2051 line. We’ve talked about it before, and certainly the bulls will cling to this fact. Today is off to a sloppy start but the SPX’s ability to hold that line once again could be important. Sloppy, consolidative trading could be the order of the day considering the looming March jobs report follows a soggy batch of economic readings this week and with many markets closed for Good Friday as that employment report hits.

FIGURE 1: HOLDING THE LINE.

So far, that is. The S&P 500 (SPX) finished down Wednesday but above the 2051 support line thanks to a late-day bounce. Data source: Standard & Poor’s. Chart source: TD Ameritrade’s thinkorswim® platform. For illustrative purposes only. Past performance does not guarantee future results.

Moving in the Right Direction. Here’s the report where “down” is good. The number of people who applied for unemployment benefits in late March fell to the second lowest amount since the recession ended and touched levels last seen 15 years ago. Initial jobless claims fell by 20,000 to a seasonally adjusted 268,000 in the seven days stretching from March 22 to March 28. The average of new claims over the past month, meanwhile, declined by 14,750 to 285,500. Historically a level of claims at or below 300,000 denotes brisk hiring and declining layoffs. But jobless claims data follow a softer-than-expected tally of March private-sector hiring in a report out on Wednesday. Needless to say Wall Street isn’t quite sure what to expect in Friday’s report.

Payrolls Forecast. Just what is expected in the Friday morning report that will echo across empty markets? The average number of monthly payroll gains over the past 12 months has been 266,000. The consensus forecast for March is a slightly softer 255,000, while the unemployment rate is expected to remain at 5.5%.

McDonald’s Lovin Their Workers? Since we’re talking jobs, it’s important to talk wages, too. That’s a key piece of the job market picture under watch at the Federal Reserve. Hiring figures have been trending up but wage increases aren’t exactly accelerating at a level that might be expected this deep into a recovery. For some restaurant workers that’s changing. McDonald’s (MCD) plans to raise pay by more than 10% and add benefits like paid vacation for workers at U.S. restaurants it operates. Street analysis of the news centers on the struggling-of-late fast-food giant’s efforts to up its game. Others say the move offers fresh evidence of rising wage pressure in the American labor market. We’ll leave that debate for another day.

Good trading,
JJ
@TDAJJKinahan

NC
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