Stocks managed a small advance over this holiday shortened trading week. The S&P 500 Index and Dow Jones Industrial Average each climbed 0.3 percent. The Nasdaq lost ground, but the losses were less than 0.1 percent. Small-caps continue to lead the market higher as the Russell 2000 rallied 1.2 percent on the week. Healthcare stocks were laggards, while financials, homebuilders and energy were among the sectors pushing the market higher.
The government released March employment data today. The unemployment rate held steady at 5.5 percent, but the number of new jobs came in nearly 50 percent below expectations. In addition to the lower than expected March number, the Bureau of Labor Statistics revised the January and February jobs numbers lower. March’s 126,000 new jobs was the lowest in over a year and one of the lowest monthly figures over the past three years.
Although the stock market is closed, futures and currencies continue to trade. The initial reaction to the jobs report was selling of equities and the U.S. dollar, and purchasing of bonds as traders expect rate hike expectations will be tempered. The Federal Reserve has focused on jobs and this weak number, if it is not a blip, could push a potential rate hike into the second half of 2015.
Nevertheless, not all the data out this week was disappointing. The manufacturing PMI was positive for March, rising to the highest level since October. Manufacturing is a leading indicator of the economy, unlike employment which is a lagging indicator. Factory orders in February were expected to fall 0.6 percent, but instead increased 0.2 percent. The February trade deficit came in lower than expected and that caused the estimate for first quarter GDP growth to tick up by 0.1 percent. Finally, although the jobs number disappointed, wage growth was 0.3 percent in March, ahead of expectations.
The biggest news of the past several days may turn out to be the nuclear deal with Iran. If sanctions are lowered, Iran will be able to sell more oil on the global market. Details still need to be negotiated and it could be weeks or months, if not longer, before Iranian oil hits the market. Oil prices were volatile this week as traders weighed the impact of the deal and geopolitical risk in the Middle East, along with a drop in U.S. oil production and another strong rise in inventories. Although prices were volatile, they stayed in a tight range between $46 and $50 a barrel.