Here’s how markets scored the March jobs report
Rate hikes are further off, depressing dollar; report not good enough to buoy stocks
By Myra P. Saefong, MarketWatch
SAN FRANCISCO (MarketWatch) — The most-anticipated U.S. economic report of the month has been released, but it didn’t really offer the clarity traders were looking for after several rounds of disappointing numbers tied to the severe winter weather.
In March, 192,000 jobs were created and the unemployment rate remained at 6.7%. Economists expected nonfarm payrolls to rise by 200,000, from 175,000 in February, and the unemployment rate to slip to 6.6% from 6.7%. But the Labor Department on Friday also said hiring in January and February was a combined 37,000 higher than initially estimated.
Here’s how investors in stocks, gold, bonds, the dollar and oil scored the report, and what they expect to move markets next.
U.S. stocks : Reaction in the stock market was mostly positive, initially, with the S&P 500 Index SPX -1.21% and Dow Jones Industrial Average DJIA -0.98% climbing to intraday highs. But equities failed to sustain early optimism and turned broadly lower.
Anthony Valeri, Investment strategist at LPL Financial, said the report was “good but not great.”
Looking ahead, “the real test for equity markets is the earnings in the second half of the year,” he said. “The bar has been lowered significantly for the first-quarter earnings after the harsh winter and as long as we see a 2-3% revenue growth, companies will be given a free pass. But then markets need to see sustained revenue growth in the 3rd and 4th quarters to justify prices.”
The Nasdaq Composite Index COMP -2.63% had also opened higher then fell, leading the losses. It was recently down 2.2%, far outstripping the Dow’s 0.5% loss. “This is a bloodbath for the Nasdaq,” said Keith Springer, president of Springer Financial Advisors. “If a confirmation was needed that [there’s a] rotation from small cap to large, we’re getting it today.”
Looking ahead, “gold will be volatile,” said Chintan Karnani, chief market analyst at Insignia Consultants. “Any U.S. economic number below expectations or around expectations will result in gains for gold.”
Oil: Oil futures on the New York Mercantile Exchange climbed as the employment data were “labeled a ‘Goldilocks’ number that was deemed strong enough to show the economic recovery is on track, but not so strong as to prompt a change in [Federal Reserve monetary] policy,” said Tim Evans, an energy analyst at Citi Futures.
Prices for the May crude contract CLK4 -0.80% may soon test last month’s lows around $97 a barrel, however, according to Casey Clark, senior trading advisor at Altavest. “With continued de-escalation [of tensions] in Crimea, look for hedge funds to drop out of their long speculative positions in May crude futures,” he said.