The futures market started well in the green this morning ahead of the ADP (ADP) payroll report. This report showed that private sector payrolls increased by 140,000 jobs in February, slightly underperforming analysts’ expectations. The leisure and hospitality and construction sectors added 41,000 and 28,000 jobs, respectively. Growth was more concentrated in larger businesses, with companies with less than 50 employees adding only about 13,000 jobs. Annual salaries increased by about 5.1% for job stayers, which marked a continuing decline since August of 2021. Overall, the markets moved little on the news, suggesting a strong start to the trading day. Later today, Federal Reserve Chairman Jerome Powell will answer questions from the U.S. Senate Banking Committee, while the Federal Reserve Beige book is due for release this afternoon. These events may well impact sentiment concerning future monetary policy.
In political news, more than a dozen states held their 2024 Presidential primaries or caucuses yesterday in an event commonly known as Super Tuesday. President Biden and former President Trump both won a vast majority of these primaries, defeating the remainder of their rivals. Note that President Biden lost in American Samoa, while former President Trump lost in Vermont. Former South Carolina governor Nikki Haley suspended her Presidential campaign this morning, suggesting the 2024 Presidential race will be a rehashing of the 2020 campaign.
The stock market started poorly yesterday and largely trended lower throughout the day as traders continued to take profits after the major market indices reached all-time highs last week. This downward pressure largely occurred throughout the day, and the indices ended not too far from their lows. Overall, the S&P 500 fell 52 points (down 1.02%), the NASDAQ finished off 268 points (down 1.65%), and the Dow Jones Industrial Average declined 405 points (down 1.04%). Market breadth was slightly negative, as decliners outpaced advancers by a 1.4-to-1.0 ratio. Energy issues were among the best performers, while technology stocks were among the weakest.
In commodity news, oil prices trended positively yesterday, though not without some choppy trading, amid calls by the government in Spain for Europe to reduce its reliance on Russian output. Elsewhere, U.S. Treasury bond yields were largely higher yesterday as traders moved away from the safe haven asset. The Chicago Board Options Exchange Volatility Index, or VIX, commonly known as the fear index, increased rapidly yesterday as traders bought options to protect against downside risk.
Several economic reports will be released in the coming days. These include initial jobless claims and U.S. productivity on Thursday. On Friday, the U.S. nonfarm payroll and unemployment rate for February are due. Additionally, Federal Reserve Chairman Jerome Powell will testify before Congress early Thursday on the state of the economy and monetary policy. Elsewhere, several dozen mostly smaller companies will report fourth-quarter earnings results and guidance for 2024 in the days ahead, though we are well past the peak of earnings season. - John E. Seibert III
At the time of this article’s writing, the author held positions in none of the companies mentioned.
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