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Market Snapshot

https://www.briefing.com/stock-market-update

Dow 34818.27 +139.92 (0.40%)
Nasdaq 14261.49 +40.98 (0.29%)
SP 500 4545.86 +15.45 (0.34%)
10-yr Note -9/32 2.442
NYSE Adv 2097 Dec 1133 Vol 996.0 mln
Nasdaq Adv 2578 Dec 1747 Vol 4.9 bln

Industry Watch
Strong: Real Estate, Utilities, Consumer Staples, Materials
Weak: Industrials, Information Technology, Financials

Moving the Market

-- March employment report shows solid jobs growth, lower unemployment, and continued wage inflation

-- 2s10s spread inverts again

-- Uptick into the close on no specific news

Stocks close higher despite 2s10s inversion
01-Apr-22 16:15 ET
Dow +139.92 at 34818.27, Nasdaq +40.98 at 14261.49, S&P +15.45 at 4545.86

[BRIEFING.COM] The S&P 500 increased 0.3% on Friday, starting the second quarter on a positive note despite a more inverted Treasury yield curve. The Nasdaq Composite (+0.3%) and Dow Jones Industrial Average (+0.4%) also rose modestly while the Russell 2000 outperformed with a 1.0% gain.

Eight of the 11 S&P 500 sectors closed higher, led by the real estate (+2.0%), utilities (+1.5%), consumer staples (+1.3%), and materials (+1.1%) sectors. Conversely, the information technology (-0.2%), financials (-0.2%), and industrials (-0.7%) sectors underperformed in negative territory.

The tech sector was pressured by valuation concerns, as the 10-yr yield rose five basis points to 2.38%; the financials sector was pressured by an inversion of the 2s10s spread, as the 2-yr yield rose 15 basis points to 2.43%; and the industrials sector was pressured by weakness in its transportation components. The Dow Jones Transportation Average dropped 4.7%.

Treasury yields pushed higher in the wake of the March employment report, which showed decent jobs growth, a lower unemployment rate, and continued wage inflation -- a recipe for the Fed to hike rates by 50 basis points next month.

More specifically, nonfarm payrolls increased by 431,000 (Briefing.com consensus 475,000) on top of an upwardly revised 750,000 (from 678,000) in February. The unemployment rate improved to 3.6% (Briefing.com consensus 3.7%) from 3.8% in February. Average hourly earnings rose 0.4%, as expected.

Transport stocks were weak, supposedly because the employment report also showed a decrease in transportation jobs (-1,000) following large gains in the prior two months.

The 2s10s inversion once again turned the conversation to a potential recession caused by the Fed aggressively hiking rates into slower growth. On the latter, the March ISM Manufacturing Index decelerated to 57.1% (Briefing.com consensus 58.3%) from 58.6% in February.

Separately, oil prices ($99.54, -0.89, -0.9%) were pressured by news that other IEA nations like Europe, Canada, Mexico, Japan, and South Korea will join the U.S. in releasing oil from their reserves. WTI crude ended the week lower by 12.6%. The U.S. Dollar Index increased 0.3% to 98.56.

Reviewing Friday's economic data:

The Employment Situation report for March showed a smaller than expected increase in nonfarm and private payrolls, which masked big upward revisions to readings from the past two months. Average hourly earnings showed an increase that was in-line with expectations, though average workweek decreased slightly.
March nonfarm payrolls increased by 431,000 (Briefing.com consensus 475,000). The 3-month average for total nonfarm payrolls decreased to 562,000 from 614,000. February nonfarm payrolls revised to 750,000 from 678,000. January nonfarm payrolls revised to 504,000 from 481,000.
March private sector payrolls increased by 426,000 (Briefing.com consensus 450,000). February private sector payrolls revised to 739,000 from 654,000. January private sector payrolls revised to 492,000 from 448,000.
March unemployment rate was 3.6% (Briefing.com consensus 3.7%) versus 3.8% in February.
March average hourly earnings increased by 0.4% (Briefing.com consensus 0.4%) after increasing a revised 0.1% (from 0.0%) in February. Over the last 12 months, average hourly earnings have risen 5.6%, versus 5.1% for the 12 months ending in January.
The average workweek in March was 34.6 hours (Briefing.com consensus 34.7) versus 34.7 hours in February.
The labor force participation rate ticked up to 62.4% from 62.3% in February. The employment-population ratio rose to 60.1% from 59.9% in February.
The key takeaway from the report is that while it showed a slowdown in hiring activity, wage growth continued and the unemployment rate returned to a pre-pandemic level, reflecting a tight job market. This combination is unlikely to deter the Fed from staying on what is expected to an aggressive rate hike path.
The March ISM Manufacturing Index decreased to 57.1% (Briefing.com consensus 58.3%) from 58.6% in February. A number above 50.0% is indicative of expansion. March marked the 22nd consecutive month of expansion in the manufacturing sector.
The key takeaway from the report is that activity slowed to its lowest pace since the end of 2020 while prices continued increasing, which suggests that inflation will continue running at a hot pace in the near term.
Total construction spending increased 0.5% month-over-month in February (Briefing.com consensus 1.0%) while the January reading was revised up to 1.6% (from 1.3%).
The key takeaway from the report is that residential spending continued increasing, which was masked by a decrease in most public construction spending.

Looking ahead, investors will receive Factory Orders for February on Monday.

Dow Jones Industrial Average -4.2% YTD
S&P 500 -4.6% YTD
Russell 2000 -6.9% YTD
Nasdaq Composite -8.8% YTD

Crude futures extend weekly losses
01-Apr-22 15:30 ET
Dow +38.27 at 34716.62, Nasdaq -37.92 at 14182.59, S&P -4.27 at 4526.14

[BRIEFING.COM] The S&P 500 is back in the red with a 0.1% decline and is on track to end the week with a 0.4% decline.

One last look at the sectors shows information technology (-0.9%), industrials (-1.0%), and financials (-0.6%) weighing on the market, while the real estate (+1.6%), utilities (+1.0%), and consumer staples (+0.9%) sectors outperform with healthy gains.

WTI crude futures settled the session lower by $0.89 (-0.9%) to $99.54/barrel, ending the week with a 12.6% decline