US Stock Market Overview – Stocks Rally on Robust Job Gains

The S&P 500 Rallies for 7th consecutive session.
David Becker
S&P 500 daily chart, April 03, 2019

US stocks moved higher on Friday, rising following a stronger than expected payroll report. Stocks were pointing to a higher open before the BLS reported Non-farm payrolls that beat expectations. News that a trade deal between the US and China was getting closer helped buoy stock prices throughout the week. All three major indices settled in the black ahead of next week beginning of earnings season. The S&P 500 index closed higher for a 7th consecutive trading session and finished the week up 2.06%. The Nasdaq 100 was the best performing index of the major three rising 2.8% for the week. All sectors were higher on Friday, led by Energy as crude oil continued to climb. Financials were the lagers climbing just 0.28% on Friday. The best performing sector for the week were the Cyclicals followed by Materials.

Jobs Data Was Stronger than Expected

US stocks received a boost following a stronger than expected payroll report. While Thursday’s jobless claims report points to stronger jobs data, the ADP private payroll was weaker than expected which made Friday’s BLS data unexpected.  According to the Department of Labor, Nonfarm payrolls increased by 196,000 in March, which was a rebound from the 33,000 jobs added in February. The unemployment rate held steady at 3.8% in March, just above a 49-year low.

Wages Continue to Rise at a Robust Pace

Average hourly wages for private-sector workers grew a solid 3.2% year over year, a slight slowdown from February, when pay rose at the best pace since recession ended in 2009. This type of wage inflation is the kind of information that generally draws concerns from the Federal Reserve. What is interesting is that strong wages gains are not spilling over into retail inflation. Job growth the prior two months was revised up by 14,000. Through the first three months of the year, employers added an average of 180,000 jobs to payrolls each month. That was a slowdown from the 223,000 jobs added each month, on average in 2018. Jobless claims point to a strong payroll number in April.

Trump Was on the Tape Demanding Lower Interest Rates

President Trump on Friday repeated his call for the Federal Reserve to cut interest rates and said that the Fed should restart buying assets to stimulate growth. Trump does not want to see a slow down into the election cycle for 2020. He wants the Fed to start easing so the economy is at full steam when the election comes around.  He also wants to blame the Fed if the economy goes south but if you claim the good you must own the bad. Trump wants the fed to immediately stop quantitative tightening which they said would occur in September. But Trump believes that is too late.

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