Mixed data caused US equities to simply plummet yesterday, marking the third straight decline in markets. The benchmark S&P 500 fell 2.6% on the day, putting the week’s loss at -3.14%. Shares in the Nasdaq were even worse with a 3.06% nosedive.
The rapid sell-off spread overseas this morning. “Virtually every overseas equity market is down, with the notable exception of China,” said Sal Guatieri from BMO Capital Markets.
Treasuries are absorbing investors money, driving the 10-year yield down two basis points to a four-month low of 3.16%. That’s giving a boost to the housing market, as 30-year mortgage rates remain below 5% at the lowest rates in four months.
The dollar is mixed but slightly firmer this morning, while WTI Crude oil down $1.19 to $69.63 per barrel.
The major event today needs no introduction. The Employment Situation report is the closely watched piece of data to be released each month. A surprise to the upside could definitely cause a market rally, but signs are pointing to a surprise in the other direction so it could be a dismal end to an already-bad week.
Key Releases Today:
8:15 ― Boston Fed President Eric Rosengren speaks on inflation and financial markets.
8:30 ― The economy may be in technical recovery, but for the average worker it will feel like a recession for months to come. In September’s Employment Situation report, the unemployment rate is expected to climb one-tenth to a fresh 26-year high of 9.8%, while nonfarm payrolls are set to drop 170,000. The latter drop is an improvement from the -216k print in August (-276k in July, -463k in June), but the economy is still a long way off from adding jobs on a month to month basis.
“The worst stretch of job losses in nearly six decades likely continued in September, albeit at a slower pace,” said Sal Guatieri, economist at BMO Capital Markets, who has revised his forecast down to -200k after poor data this week. “Based on other September job indicators released this week (-254k ADP, a drop in the Conference Board's job prospects measure, and a dip in the Monster online job index), there is some downside risk for today’s report.”
John Herrmann, president of Herrmann Forecasting, added: “The outlook for labor markets is improving, yet possibly not as rapidly, nor as strongly, to calm market participants’ anxieties over the risks to the 2H-2010 real economic growth outlook.”
10:00 ― With markets still digesting the latest employment numbers, the Factory Orders report is bound to be ignored unless there are major revisions to new orders for durable goods. In July factory orders jumped 1.3% ― the fastest monthly pace in in 13 months ― and stabilization looks likely to continue with economists expecting a +1.0% print in August.
4:30: ― Dallas Fed President Richard Fisher will speak about the global economy.