We got a mixed bag for our first trading day for the week, month and quarter: while the Dow gained +323 points, +0.97% and the S&P 500 grew +0.36% — partially on strong results from the Energy market (+6%) on a new OPEC+ drawdown of oil output — the Nasdaq reached only -0.24% for the session, and the small-cap Russell 2000 was -0.21%. Energy excepted, most industries are still wary about a near-to-medium-term future where we go head-to-head with a real recession.
Results from S&P and ISM Manufacturing PMI for March both came in light of estimates this morning: March totals of 49.2 and 46.3%, respectively, articulate a 10 basis point (bps) and 100 bps miss, respectively — and neither print was expected to head back into growth territory (above 50). The ISM in particular was weak, the lowest read of the past year, and worst since the major disruption we saw during the Covid pandemic. Recession concerns and continually increasing interest rates are apparently having a dampening affect on domestic goods-producing.
Construction Spending for February swung to a negative -0.1% from an expected 0.0%; this is even more profound comparing it the the previous month’s upwardly revised +0.4%. Its the fourth month in the past seven that either came in negative or unchanged — not a good look for the construction market. Business was better in nonresidential, but household construction spending dwindled by -0.6% for the month.
These dribs and drabs of economic well-being are like breadcrumbs to the next Fed meeting (not for another month), and if weak results like those we’ve seen today cross industries and begin to bring the economy to a slow stop, there’s little reason for the Fed to continue raising interest rates — even as a majority of analysts are still placing bets on yet another 25 basis-point (bps) hike at the May 2 meeting.
Tomorrow brings us the Job Openings and Labor Turnover Survey (JOLTS), where it is expected to show 10.5 million jobs are still unfilled for the month of February. We’ll look for a small percentage of these jobs simply dying on the vine: not filled, but no longer necessary, but as long as we’re still going forward with such a large number of unfilled positions, we’re going to see opportunity for inflation to remain sticky in the labor force.
Today was really about about the OPEC+ news, however. The consortium actively bringing about lower accessibility to crude oil is already bringing prices higher in the market, and soon enough at the gas pump. Eventually, however, power plays like this are likely to fail, as technology continues to innovate ways to store and use energy without the world’s most popular fossil fuel. OPEC+ keeps gambling and keeps winning — and is likely to do so here, as well — but one day a major supply cut won’t meaningfully affect the global energy business. And when that day comes, the Earth will thank us.
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Mixed Bag on 1st Trading Day of Q2
We got a mixed bag for our first trading day for the week, month and quarter: while the Dow gained +323 points, +0.97% and the S&P 500 grew +0.36% — partially on strong results from the Energy market (+6%) on a new OPEC+ drawdown of oil output — the Nasdaq reached only -0.24% for the session, and the small-cap Russell 2000 was -0.21%. Energy excepted, most industries are still wary about a near-to-medium-term future where we go head-to-head with a real recession.
Results from S&P and ISM Manufacturing PMI for March both came in light of estimates this morning: March totals of 49.2 and 46.3%, respectively, articulate a 10 basis point (bps) and 100 bps miss, respectively — and neither print was expected to head back into growth territory (above 50). The ISM in particular was weak, the lowest read of the past year, and worst since the major disruption we saw during the Covid pandemic. Recession concerns and continually increasing interest rates are apparently having a dampening affect on domestic goods-producing.
Construction Spending for February swung to a negative -0.1% from an expected 0.0%; this is even more profound comparing it the the previous month’s upwardly revised +0.4%. Its the fourth month in the past seven that either came in negative or unchanged — not a good look for the construction market. Business was better in nonresidential, but household construction spending dwindled by -0.6% for the month.
These dribs and drabs of economic well-being are like breadcrumbs to the next Fed meeting (not for another month), and if weak results like those we’ve seen today cross industries and begin to bring the economy to a slow stop, there’s little reason for the Fed to continue raising interest rates — even as a majority of analysts are still placing bets on yet another 25 basis-point (bps) hike at the May 2 meeting.
Tomorrow brings us the Job Openings and Labor Turnover Survey (JOLTS), where it is expected to show 10.5 million jobs are still unfilled for the month of February. We’ll look for a small percentage of these jobs simply dying on the vine: not filled, but no longer necessary, but as long as we’re still going forward with such a large number of unfilled positions, we’re going to see opportunity for inflation to remain sticky in the labor force.
Today was really about about the OPEC+ news, however. The consortium actively bringing about lower accessibility to crude oil is already bringing prices higher in the market, and soon enough at the gas pump. Eventually, however, power plays like this are likely to fail, as technology continues to innovate ways to store and use energy without the world’s most popular fossil fuel. OPEC+ keeps gambling and keeps winning — and is likely to do so here, as well — but one day a major supply cut won’t meaningfully affect the global energy business. And when that day comes, the Earth will thank us.
Questions or comments about this article and/or its author? Click here>>