Stock Market Forecast – Stocks Slide on Weak Jobs Data
Stocks prices moved lower on Friday, as softer than expected jobs growth weighed on riskier assets. Stock futures were pointing to a lower open ahead of the jobs data, as a surprising drop in Chinese exports pushed the Shanghai index down 4.4%. Growth in the worlds second largest economy is likely to drop below 6%. The softer than expected jobs data possibly confirmed a decline in global growth. Sectors were mixed, led down by energy, which saw EOG tumbled more than 4% and Conoco Phillips drop 3.4%. The US yields moved lower putting weigh on the dollar, which helped stock prices rebound from session lows. Crude oil prices sank 1% which generated headwinds for energy shares. Stock prices over the past 10-trading session have traded in the red. The only sector to show positive returns during this period is utilities.
Payrolls Rise Less than Expected
Non-farm payrolls rose by 20,000 jobs in February according to the Labor Department. Expectations had been for a 185,000 rise. Most of the declines came in the construction sector, which saw a low of 31,000 jobs. February was colder than normal month with temperatures dipping in Chicago to less than -24 F. This could have created a headwind for construction jobs which might be revised. The report completely missed expectations but follows January’s surprisingly strong 311,000 payrolls, which were revised higher by 7,000 workers.
The unemployment rate also fell by 0.2% point to 3.8% and average hourly wages grew at an annual pace of 3.4%. There were declines of 13,000 jobs in both civil engineering and specialty trade contractors. The only outperforming sector was financial and services. A positive in the report was the real unemployment rate, called the U-6, which dropped to an 18-year low of 7.3% from 8.1% last month. That number includes discouraged workers as well as those holding jobs part time for economic reasons.
January Housing Starts Were Stronger than Expected
In a reversal, US Housing starts for January came in stronger than expected. The decline in US yields during the first quarter has helped the Housing market gain traction. US homebuilding saw the construction of single-family homes rebound after four straight monthly declines, but building permits for these units fell to the lowest level since mid-2017. The Commerce Department reported that housing starts increased by 18.6% in January to a rate of 1.23 million. Housing starts for December were revised lower dropping to a rate of 1.037 from 1.078. Building permits rose 1.4% to a rate of 1.345 million units in January. Expectations were for housing starts to increase to 1.197 in January. The data was delayed because of the government shutdown.
This article was originally posted on FX Empire
