Last Week’s Markets in Review: Will Jobs Data Influence the Fed?
Global equity markets finished mixed for the week. In the U.S., the S&P 500 Index closed the week at a level of 4,105, representing an increase of 1.38%, while the Russell Midcap Index moved -1.84% lower last week. Meanwhile, the Russell 2000 Index, a measure of the Nation’s smallest publicly traded firms, returned -0.76% over the week. As developed, international equity performance and emerging markets were mixed returning 0.48% and -0.26%, respectively. Finally, the 10-year U.S. Treasury yield moved lower, closing the week at 3.39%.
The topic for the Holiday shortened week that just passed was the jobs market. Investors digested four reports on the current status of the domestic employment environment. The JOLTS report led off the week on Tuesday. On Wednesday, ADP released March data for the private sector. Weekly claims for unemployment benefits were released on Thursday, and the Labor Department’s Employment Situation Report for March was released on Friday. Each of these labor market updates will likely influence what the Federal Reserve decides to do with interest rates after they meet in May and June.
The Labor Department reported that job openings fell below 10 million in February for the first time in nearly two years. Available positions totaled 9.93 million, a drop of 632,000 from January’s downwardly revised number, and below market expectations looking for 10.4 million openings.
ADP, the payroll processing firm, reported last Wednesday that private sector payrolls rose by 145,000 during the month of March. This total was down from an upwardly revised 261,000 in February and below the consensus estimate of 210,000. The market’s perception of the first two reports was that the weaker-than-expected results were a signal that the labor market was beginning to decelerate as a result of the aggressive rate-hiking policy from the Fed.
For the week that ended April 1, jobless claims were 228,000. This amount was higher than the forecast of 196,500. Continuing claims climbed to 1.823 million, indicating that it may be more difficult for recently unemployed workers to find new jobs.
The week ended with the release of the Employment Situation report for March from the Labor Department. Nonfarm payrolls grew by 236,000 for March, compared to the consensus estimate of 238,000 and below the upwardly revised 326,000 in February. The unemployment rate also moved lower to 3.5% amid an increase in labor force participation. Average hourly earnings rose 0.3%, pushing the 12-month increase to 4.2%, representing the weakest earnings increase since June 2021.
Investors should consider all the information discussed within this market update and many other factors when managing their investment portfolios. However, with so much data and so little time to digest, we encourage investors to work with experienced financial professionals to help process all this information to build and manage the asset allocations within their portfolios consistent with their objectives, timeframe, and tolerance for risk.
Best wishes for the week ahead!
Data from the ADP National Employment Repost was sourced from adpemploymentreport.com. The JOLTS, continuing claims data and the Employment Situation Report are sourced from the Labor Department. Equity Market, Fixed Income returns, and rates are from Bloomberg as of 3/24/23. Economic Calendar Data from Econoday as of 4/7/23. International developed markets are measured by the MSCI EAFE Index, emerging markets are measured by the MSCI EM Index, and U.S. Large Caps are defined by the S&P 500 Index. Sector performance is measured using the GICS methodology.
Disclosures: Past performance does not guarantee future results. We have taken this information from sources that we believe to be reliable and accurate. Hennion and Walsh cannot guarantee the accuracy of said information and cannot be held liable. You cannot invest directly in an index. Diversification can help mitigate the risk and volatility in your portfolio but does not ensure a profit or guarantee against a loss.