Market Perspective for April 8, 2024

The past week was dealt a surprise with the release of the March jobs report on Friday. This week also featured comments from Federal Reserve Chair Jerome Powell and other Fed members. Those statements provided some key insight into what market participants can expect regarding interest rate hikes. In addition, the JOLTS report as well as the ISM Services and ISM Manufacturing reports were released.

The JOLTS report showed that there were 8.76 million jobs available in March. This was in line with expectations and a tad higher than the 8.75 million reported last month. The ISM Services PMI came in at 51.4 percent, which was lower than the expected 52.8 percent and lower than the 52.6 percent reported last month. Conversely, the ISM Manufacturing report came in above expectations at 50.3 percent.

Analysts had expected that figure to be 48.5 percent, and April’s report came in higher than the 47.8 percent reported last month. On Thursday, unemployment claims data showed that 221,000 requests for benefits were made, which was higher than the predicted 213,000.

In addition to the BLS nonfarm payroll (NFP) report on Friday, the ADP NFP report was issued on Wednesday. It found that 184,000 jobs were added to the economy in March, which was higher than the expected 148,000.

The BLS report showed that 303,000 jobs were added to the economy in March compared to an expected 212,000. This was compared to 270,000 jobs added last month and 353,000 created in January.

This month’s reading may convince some members of the Fed to continue delaying interest rate hikes to 2025 altogether. It’s also worth noting that other reports released Friday morning showed that the unemployment rate dropped to 3.8 percent while average monthly earnings rose by .3 percent.

During prepared remarks on Wednesday, Jerome Powell said that it will take time to digest recent data and that the central bank would move carefully. He reiterated that no cuts would be made until there was confidence that the market was headed toward 2 percent inflation. He also said that the strength of the economy in the face of a restrictive policy gave more time to simply wait before making a decision.

Member Mester also commented on Thursday saying that while interest rate cuts are still on the table this year, inflation is unlikely to cool as much or as quickly as it did last year.

The S&P closed down 1 percent this week to finish at 5,204. It would make its high of the week on Monday morning at 5,261 while making its low of the week on Thursday at 5,156. The index is up about 2 percent for the past 30 days.

Despite gaining 307 points on Friday, the Dow was down 806 points during the past week, which is a drop of 2 percent over the last five days. On Monday, the market opened at the high of the week starting at 39,709 before falling to its low of the week of 38,619 on Thursday.

Finally, the Nasdaq followed the same pattern the Dow did having a strong close to the week despite losing ground over the last five days. On Friday, the Nasdaq gained 199 points to pare its weekly loss to 226 points and close at 16,248. As with the other major indices, the Nasdaq made its high on Monday at 16,475 while making a low of 16,088 on Thursday.

In international news, the Swiss central bank reported that inflation was flat on a monthly basis compared to an expected increase of .3 percent. On Friday, Canada announced that its economy had lost 2,200 jobs and saw its unemployment rate increase to 6.1 percent.

This upcoming week features monthly and yearly inflation reports being released on Wednesday. Also on Wednesday, the FOMC will release its most recent meeting minutes. On Thursday, monthly Price Producer Index (PPI) will be released while Friday sees the release of the preliminary inflation and consumer sentiment figures from the University of Michigan.

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