After an insane day in the stock market yesterday, which saw the Dow fall by nearly 1,000 points, or 9.2%, before rebounding and closing with a loss of 3.20% ― all because of a trader’s typing error, perhaps? ― stock futures are on their way to stabilizing.
“It is not clear exactly what sparked the 10 minutes of utter chaos in the markets yesterday afternoon, but the underlining story is undoubtedly fear that the Greek nightmare will spread to the much bigger economies of Spain and Italy, driving the Euro Zone into a deep new recession and wreaking havoc in the banking system,” said Ian Shepherdson of High Frequency Economics.”
“Financial contagion, round two, is the fear, but the twist in the tale is that the debt risk is sovereign rather than private, and it is potentially flowing from Europe to the U.S., not the other way around,” he added.
Asian stocks reacted promptly to the turmoil: Japan's Nikkei 225 slid 3.1%, China's Shanghai index fell 1.9%, and Hong Kong's Hang Seng index sunk 1.1%.
About ninety minutes before the opening bell, Dow futures are up 61 points to 10,518 and S&P 500 futures are up 8 points to 1,130.50.
NYMEX crude oil futures are up 0.70 to $77.81, while gold is flat at $1,197.00.
Volatility is likely to continue as investors figure out what the ‘new normal’ should be. That’s difficult enough on it own, and the situation will only be more pressing as the month’s most important data numbers for national employment are released an hour before the opening bell.
Key Events Today:
8:30 ― The month’s most closely watched data report the, the Employment Report, should bring good news to financial markets. The consensus among economists is that 200,000 jobs were added to the economy in April, which should keep the unemployment rate at 9.7%. The range of expectations is incredibly wide though, with some economists projecting half a million new jobs, while the pessimists look for 110k jobs, meaning that even bad news is relatively good.
“Upward revisions to back data resulted in March being the third consecutive month for gains in private payroll jobs,” said Ellen Zentner from BTMU. “All eyes will be on April’s report, however, to see if that trend continued and strengthened. We think it has. Although March private payrolls included some weather-related bounce from February we think the pace of hiring in the private sector should be comparable in April.”
Economists from BBVA added that Census jobs will once again help boost payrolls, while private sector employment is also rising.
“An improvement in the employment situation would bode well for consumer spending and could indicate that consumption could pick-up further in the second quarter,” they wrote. “Nevertheless, even though the economy is adding jobs, the unemployment rate will remain high as those who dropped out of labor market begin to look for work again.”
Taking a wider view, analysts at IHS Global Insight said the economy will add “about a million jobs this year―a modest but not jobless recovery.” They said bringing the unemployment rate down will be a long slog though, as potential workers seeing job creation will come back into the labor force and thus slow the unemployment decline.
11:30 ― Charles Plosser, president of the Philly Fed, addresses the Delaware State Chamber of Commerce Economic Outlook luncheon in Wilmington.
3:00 ― Consumer Credit is set to be cut by $3.0 billion in March, or just a fraction of the massive $11.5 billion contraction seen in February. The smaller cut may indicate some stabilization, especially in light of the January’s $10.6 billion credit upswing.
“The pace of decline in consumer credit outstanding could slow, although still-high household leverage implies that considerable debt reduction still lies ahead,” said economists at Nomura.
