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Stocks Slip to Start Second Quarter
US equity markets mostly fell to start the second quarter on a shortened trading week. Global equities (represented by the MSCI All Country World Index) were down -0.03%, and domestic stocks (represented by the S&P 500 Index) were down -0.06%.
Labor Market Update
The US unemployment rate fell to 3.50% in March from 3.60% the month prior, remaining historically low with US average hourly earnings rising a modest 0.3% for the month. The US economy generated 236,000 jobs in March which was the lowest monthly gain since December 2020. The Job Openings and Labor Turnover Survey (JOLTS) report also showed job openings declining more than expected in February and falling below 10 million for the first time since May 2021. While the multitude of data released last week continued to show a relatively strong labor market, the pace of expansion looked to have moderated in March.
ISM Manufacturing Index
The Institute for Supply Management’s (ISM) manufacturing and services activity gauges both showed signs of cooling in March. The ISM manufacturing Purchasing Managers Index (PMI) fell to 46.30, below expectations of 47.50 and the lowest reading since May 2020. The ISM services PMI remained in expansion territory (higher than 50) at 51.20 but also below expectations and falling from the previous month’s reading of 55.10.
Oil Prices Surge
US crude oil prices surged over 6% last Monday as Saudi Arabia and members of OPEC announced plans to cut oil production. Oil prices rose above $80 per barrel but are still down from the mid-2022 highs of over $115 per barrel.
Consumer Price Index
This week the Consumer Price Index report is scheduled for Wednesday which will be an indicator of the moderating trend in US inflation continued through March. February’s reading showed an annual rate of 6.0% which was the lowest reading since September 2021. Earnings season also kicks off with major banks reporting this week. According to FactSet, analysts are expecting an average earnings decrease of 6.8% from the same period a year prior for S&P 500 companies.
I’d like to leave you with the final line we’ve used since we started these commentaries back at the very height of market volatility in March 2020. Always remember that we create financial/investment plans not for the easy times, but to prepare for the tough ones.
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