Profit Taking, Kashkari, Strong Jobs Report Pressure Markets – Apr 5 Market Recap
Indices
- Dow 38,904, -571 or -1.45%.
- Nasdaq 16,249, -179 or -1.09%.
- MSCI EAFE 2317.36, -34.21 or -1.45%.
- S&P 5,204, -30, or -0.57%.
- USD10Y 4.378%, +16.0bp or +3.79%.
- WTI Crude $86.73 bbl, +$5.92 or +7.33%.
Profit Taking, Kashkari, and Strong Jobs Report Pressure Markets
Profit taking was the name of the game to begin the week as the S&P had not had a 2% pullback from the highs since last October. The selloff continued Tuesday as good news (U.S. manufacturing finally showing signs of life and an unchanged JOLTS report) was interpreted as bad news with regard to future Fed rate cuts. On Thursday, Minneapolis Fed President (a non-voting member this year) delivered the kill shot stating that he expected only two rate cuts this year as opposed to the expected three, and further offered that if inflation data continued to trend sideways, he would support zero cuts. Markets rallied somewhat on Friday despite a ferociously strong jobs report but only managed to put a dent in the losses for the week.
Crude oil spiked and has rallied some +36% since the December lows. This week’s rally was caused in part by the OPEC+ decision to continue their 2.2 million bbl/day production cuts through June, the continued Houthi threat to shipping in the Red Sea, and the potential of an Iranian direct attack on Israel in retaliation for an Israeli attack in Damascus, Syria that killed an Iranian senior commander on Monday.
This Week: April 8 – April 12
First quarter earnings season kicks off with Delta Airlines (DAL) reporting on Wednesday, followed by financial services giant Blackrock, and money center banks JP Morgan Chase (JPM), Citigroup (C), and Wells Fargo (WFC) on Friday.
Economic data includes another hugely important Consumer Price and Producer Price Index report along with the minutes from the Fed’s March meeting.
Economic Calendar
- Monday – Economic Releases: N/A. Earnings: N/A
- Tuesday – Economic Releases: N/A. Earnings: N/A.
- Wednesday – Economic Releases: March Consumer Price Index (CPI), March FOMC minutes. Earnings: Delta Airlines (DAL).
- Thursday – Economic Releases: Initial Jobless Claims, March Producer Price Index (PPI). Earnings: N/A.
- Friday – Economic Releases: N/A. Earnings: JP Morgan Chase (JPM), Blackrock (BLK), Citigroup (C), Wells Fargo (WFC).
Last Week‘s Daily Trading Recap…
Monday – Dow -241 to 39,567, Nasdaq +17 to 16,386, S&P -10 to 5,243, USD10Y +12.3bp to 4.329%.
- Eight of eleven S&P sectors traded down today, led lower by Real Estate, Health Care, and Industrials.
- March S&P Final U.S. Manufacturing continued to show expansion at 51.9 vs expectations and last month’s 52.5 print.
- March ISM Manufacturing improved into expansion territory for the first time in seventeen months to settle at 50.3% vs 48.1% expected and vs last month’s 47.8% print.
Tuesday – Dow -397 to 39,170, Nasdaq -156 to 16,240, S&P -38 to 5,205, USD10Y +3.6bp to 4.365%.
- Eight of eleven S&P sectors traded down today, led lower by Health Care, Consumer Discretionary, and Real Estate.
- The February Job Openings and Labor Turnover Survey (JOLTS) was unchanged from last month and in line with expectations at 8.8 million.
- Tesla (TSLA) fell another 4.9% today after reporting an 8.5% decline in year-over-year first quarter deliveries. TSLA is down nearly 33% year to date.
Wednesday – Dow -43 to 39,127, Nasdaq +37 to 16,277, S&P +6 to 5,211, USD10Y –1.0bp to 4.355%.
- Seven of eleven S&P sectors traded higher today, led by Communication Services, Energy, and Materials.
- March ADP Private Payrolls were stronger than expected at 184,000 vs 155,000 expected and vs the same 155,000 last month.
- March ISM Services Survey fell to 51.4 vs 52.7 expected and vs last month’s 52.6 print.
- March S&P Services PMI also fell to 51.7 vs 52.3 last month.
- Fed Chair Powell stated that more evidence that inflation is abating is needed before rates can be cut.
Thursday – Dow -530 to 38,597, Nasdaq -228 to 16,049, S&P -64 to 5,147, USD10Y -4.6bp to 4.309%.
- All eleven S&P sectors traded down today, led lower by Technology, Health Care, and Communication Services.
- Jobless claims fell to 221,000, vs 213,000 forecast and vs. last week’s slightly revised higher print of 212,000 (originally 210,000).
- Minneapolis Fed President Neel Kashkari (a non-voting member this year) spooked the markets today when he said he expected only two not three rate cuts this year while questioning whether any interest rate cuts would be warranted in 2024 if the inflation data continues to trend unchanged.
Friday – Dow +307 to 38,904, Nasdaq +199 to 16,249, S&P +57 to 5,204, USD10Y +6.9bp to 4.378%.
- All eleven S&P sectors traded higher today, led by Communication Service, Industrials, and Technology.
- March U.S. Non-Farm Payroll beat expectations handily again at 303,000 vs 200,000 expected and vs 270,000 last month.
- The March U.S. Unemployment Rate fell, as expected, to 3.8% from 3.9% last month.
- March U.S. Average Hourly Wages increased by +0.3% as expected vs +0.1% last month.
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