(As of 7:10 am PST)
“Sell
in May and go away” is playing out right under our noses as US equity markets
continue to feel pressure in their first week of trading in the new month.
Stocks fell to their lowest level in three weeks yesterday, dragged down by
disappointing manufacturing data in China and slumping oil prices. Energy
prices have stabilized today, but the recovery in oil has not translated into
equity gains in the first hour of the session. Instead, worries over weak US
economic data are weighing on stocks. Let’s look at the data. The ADP
employment report for April showed 156,000 private sector jobs were added, well
below the 200,000 expected. The report is often viewed as a pre-cursor of
Friday’s non-farm payrolls report, a data set that the Federal Reserve monitors
closely. A report on US productivity showed weakness as well, with productivity
falling to a 1% annualized rate in the first quarter, marking the fourth drop
in six quarters. On the bright side, factory orders rose 1.1% in March, while
activity in the services sector picked up in April, both reports beating
expectations. Rounding out today’s deluge of data was a report on the US trade
balance which showed the trade deficit shrinking in March to its lowest level
in more than a year. All in all, today’s data continues to paint a muddied
picture of an economy that is growing at a slow pace. International markets are
struggling as well today with Asia closing with red across the board, while
European stocks slumped amidst a raft of disappointing earnings results. Gold
prices are lower today while interest rates and the US dollar are on the rise.
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