According to the futures market, the major domestic stock market indexes are poised for a tepid open to today’s trading. Before the bell, the U.S. Bureau of Labor Statistics (BLS) released key employment data for the month of January. A total of just 143,000 jobs were added, versus the experts’ outlook of 169,000 and the outsized (revised up) December tally of 307,000. As was not anticipated, the unemployment rate slipped one-tenth of a percentage point to 4.0%. Labor participation improved to 62.6% from 62.5%.
Earlier in the week, it was shown that the number of job openings in December declined by about 600,000, month over month, to 7.6 million. Too, a report came in indicating an uptick in jobless claims last week. It’s not surprising that fewer people are now job hopping.
Also prior to today’s start of trading, the BLS stated that hourly wages increased a strong 0.5% in January, above the previous-month pace of 0.3%. Year over year, wages ramped up 4.1%, compared to 3.9% growth in December; economists expected only a 3.7% advance. On balance, the overall labor picture remains fairly bright. Importantly, the Federal Reserve is probably happy not to see any significant trend in big corporate layoffs.
Shortly, a preliminary January consumer sentiment measure will be released by the University of Michigan. A slight improvement is expected. Still, readings, lately, have not been impressive. This is likely due to the ongoing stress of inflation. Contrary to this fact, consumer spending is holding up fairly well, no doubt supported by the reasonably favorable job market. Later today, consumer credit numbers will be unveiled. We would not be surprised to see an uptick, as household budgets are a bit stressed by the elevated cost of housing, food, and other necessities.
The U.S. stock market indexes look to wrap up this week in positive territory. That’s even with the rough start on Monday, when investors showed their nervousness over President Trump’s weekend implementation of tariffs against goods from Mexico, Canada, and China. The announcement of delays to the Mexico and Canada tariffs, and only modest pushback from China, brought some relief to the markets on Tuesday. Too, a progressing, solid corporate earnings season helped to move share prices higher. Positive data on the manufacturing and services sectors, indicating expansion, were helpful, as well.
Next week, investors will digest new inflation data in the forms of the consumer price index and the producer price index. Wall Street is hoping for an easing in price momentum, which would pave the way for more short-term interest rate cuts on the part of the central bank. Additionally, data on jobless claims, retail sales, industrial production, and domestic capacity utilization will roll out. The Fed will monitor all the incoming numbers, prior to its next scheduled meeting on March 18th and 19th.
The stock markets don’t like uncertainty, and they are getting a healthy dose of it from President Trump’s administration. Even so, investors are learning to live with his sometimes extreme rhetoric. So far this year, notwithstanding a few spikes, market volatility has not been concerning. All considered, we advise investors to diversify their portfolios with a sizeable core of stable, large cap equities in industry leaders. – David M. Reimer
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
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