logo-loader

Losses lengthen after March jobs data jolt

Last updated: 16:30 06 Apr 2018 EDT, First published: 03:17 06 Apr 2018 EDT

Distraught trader
  • Non-farm payrolls rose by 103,000 in March

  • The unemployment rate remained unchanged at 4.1%

  • Dow down 572 at 23,933

  • S&P 500 down 58 at 2,604

The market's switchback ride continued on Friday with Thursday's rally followed by a massive shake-out.

The Dow Jones fell 572 points, or 2.3%, to close at 23,933 while the broader-based S&P 500 index plunged 58 points (2.2%) to 2,604.

The CBOE Volatility Index, which is often referred to as the “fear index”, rose 13.4% to 21.49 – the latter value representing the expected annualized change in the S&P 500 index over the next 30 days of trading.

Across the border, the S&P/TSX Index fell 149 points (1%) to 15,207.

With investors taking flight, spooked by escalating trade tensions between the US and China, the traditional haven for risk-averse investors – gold – enjoyed a good day, rising US$8.80 (0.7%) to US$1,337.30 an ounce.

Mid-session

The benchmark indexes have given back all of yesterday's gains - and then some – on Friday after underwhelming jobs data for March.

The Dow Jones average was down 383 at 24,122 and the S&P 500 was down 31 at 2,632.

“Nonfarm payrolls rose 103,000 in March with the three-month average at a solid 202,000 jobs. Consistent with 2.5-3.0 percent economic growth in the first half of 2018, job gains come with a likely FOMC June rate hike, soon followed by two more in the second half of 2018,” predicted Wells Fargo Securities.

“The unemployment rate was unchanged in March, sticking at 4.1% for a sixth consecutive month. The late winter storms that hit the northeast appear to have had only a small impact on unemployment last month; 159,000 workers reported they were unable to work last month due weather, which is only modestly above the 143,000 average for March over the past 41 years,” Wells Fargo added.

Open

US benchmarks opened sharply lower in the wake of disappointing jobs data for March.

The Dow Jones industrial average was down 158 points at 24,347 and the S&P 500 was off 13 points at 2,649.

READ U.S. non-farm payrolls rise less-than-expected 103,000; jobless rate holds at 4%

"The U.S. Employment Report for March disappointed on headline job growth, with only 103,000 net new jobs, but that follows February’s outsized 326,000 gain, plus other details on average hourly earnings, the unemployment rate, and broader measures of labor market slack all suggest that the jobs market remains in good shape," commented Mickey Levy at Berenberg Bank.

"We believe that inclement weather in March had at most a slight effect on the softer-than-expected job gain, with the number of persons not at work because of bad weather lower than March 2015, March 2016, and March 2017. A payback from strong February job gains is more to blame," Levy added.

US jobs data for March

The March jobs report missed expectations big time, with just 103,000 new jobs added, versus expectations of around 190,000 additions.

The Dow, which prior to the release had been expected to open at around 24,242, is now tipped to start proceedings at around 24,293, presumably on the basis that the Fed will now slow down its interest rate hike program.

The S&P 500, seen opening at around 2,636 before the release of the jobs report changed perceptions, is expected to open at around 2,643.

The unemployment rate, which had been expected to dip to 4.0%, remained at a 17-year low of 4.1%.

Preview

After yesterday's storming sessions, US benchmarks were expected to open sharply lower on renewed fears of a trade war with China.

Just over half an hour before the release of the market-moving non-farm payrolls report, the Dow Jones average, which rose 241 points yesterday to close at 24,505, was expected to open at around 24,242.

The S&P 500, which added 18 points yesterday to close at 2,663, was tipped to open its account 27 points lower at 2,636.

“The declaration by Trump that he has instructed the US Trade Representative to consider another $100 billion of tariffs under section 301 has once again sent markets lower, although not as much as previous tariff announcements have,” noted Craig Erlam at online trading platform operator Oanda.

As for March's jobs report, economists are expecting around 190,000 jobs to have been added, down from February's surprisingly robust 313,000 additions.

The unemployment rate is expected to dip to 4% and average hourly earnings to rise 0.3% after February's 0.1% increase.

On the corporate front, fashion retailer Urban Outfitters Inc (NASDAQ:URBN) dipped 1.5% to US$37.99 in pre-market trading after it was announced that David McCreight, the chief executive officer and president of the retailer's Anthropologie unit, would leave the company at the end of this month.

Also changing jobs is Joseph Jackson, the chief executive officer of Wageworks Inc. He will be succeeded by Edgar Montes, currently the president and chief operating officer of the company; Jackson will become the chairman.

The stock tumbled 6.8% to US$42 in screen-based trading as the employee benefits schemes specialist revealed that its audit committee had found that revenues for 2016 had been overstated, and that chief financial officer Colm Callan and Kim Wilford, the senior vice president, general counsel and corporate secretary, would be resigning

The Campbell Soup Company (NYSE:CPB) was unstirred by news of a strategic reorganization.

Luca Mignini has been named as chief operating officer, responsible for the group's soup, simple means, snacks and “shelf-stable” beverage portfolios.

BenevolentAI advances novel ulcerative colitis treatment through Phase 1a trial

BenevolentAI (OTC:BAIVF) chief scientific officer Dr Anne Phelan joins Proactive's Stephen Gunnion with positive safety data from the Phase 1a, first-in-human, clinical study of BEN-8744 in healthy volunteers. Phelan explained that BEN-8744 is a potent, selective PD10 inhibitor, uniquely...

16 minutes ago