(As of 7:20 am PST)
US stocks look set to begin
the new month and new quarter on a negative note after wrapping up a quarter
for the ages. The S&P500 finished the first quarter of 2016 with gains of
0.8% after a dismal January which sent the broad US indexes into official
correction territory. The bounce off February’s lows was strong and swift and
followed a rebound in oil prices and a more dovish Federal Reserve. As we enter
the second quarter the same themes prevail for investors: oil prices, central bank
policy, and global growth forecasts. We’ll get a picture of the impacts of
these themes on US companies when earnings season kicks off in just about a
week. In the meantime, there’s some important data on tap that may help
investors firm up positions in the coming days. Today’s notable report was the
official March jobs report. The government reported Friday that 215,000 new
jobs were created in March – better than expected. The unemployment rate ticked
up from 4.9% to 5% but average hourly wages rose by 0.3%. It was a strong
headline number which indicates the economy is still expanding at a good clip.
Other data today included a report on construction spending which showed
spending fell 0.5% in February while a report on March factory activity (ISM
index) showed activity expanding for the first time in six months. Lastly, a
report on consumer sentiment showed March sentiment rising ahead of
expectations. Most data is being overshadowed today by a sharp drop in oil
prices, which comes ahead of a report on oil rig counts later this afternoon.
Oil fell as much as 4% in early trading, dragging energy stocks to the downside
as well. International markets moved into the weekend with some sizable losses,
likely due to the drop in oil. Gold and treasury prices aren’t offering much
safe haven support today with both asset prices down slightly.
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