Dow sank at the opening & continued adding to those losses. Dow is off 161, decliners over advancers 6-1 & NAZ dropped a bigger 51 (with Apple falling 9). Banks led the selling with the Financial Index dropping almost 4 to the 209s. The MLP index fell 4+ to 390 & the REIT index was off 3+ to 251. Junk bond funds were a little lower, but Treasuries rose bringing lower yields. Oil is having a bad day & gold plunged to a 12-week low as the dollar strengthened on signs the Federal Reserve may refrain from providing more stimulus measures.
Private companies continued to add jobs in Mar, but at a slightly slower pace than in Feb. Businesses added 209K, according to a report issued by ADP (lower than the forecast of 217K & marked a slowdown from 230K private sector jobs added in Feb). Strong jobs data throughout the winter has been partially attributed to unseasonably warm weather, which allows some firms (i.e. construction) to remain fully operational during colder months. Once that effect fades, job creation could weaken. Small businesses continued to drive job growth. Companies with fewer than 50 employees made up about half of all private sector job gains, hiring 100K. Large companies with 500 or more employees hired 22K new workers & medium-sized businesses added 87K to their payrolls. The ADP report typically sets the tone for the gov highly anticipated monthly jobs report on Fri. While the reports tend to show the same trends over the long term, their figures can diverge from month to month.
Company Payrolls in U.S. Grow by Estimated 209,000 Workers
Photo: Bloomberg
ECB President Draghi said it was premature to talk about withdrawing the bank's massive emergency loans to banks given slack economic conditions & record high levels of unemployment across the 17-country eurozone. Draghi spoke after the ECB left its key interest rate unchanged at the record low of 1%. He said the bank was still sizing up the "powerful and complex" effects of the €1T ($1.3T) in loans it handed out in 2 batches to banks in Dec & Feb. He added that the 2nd round of the loans came too late to appear in the recent economic data the bank has to consider but stressed that the onus was on govs to push thru economic reforms that will help revitalize their economies. "So it's necessarily a partial analysis that we are having today," he said. "Given the present conditions of output and unemployment, which is at an historical high, any exit strategy talk is premature." The eurozone economy shrank 0.3% in Q4 & indicators for future growth indicators remain weak, raising the likelihood that the economy shrank again in Q1, creating the technical definition of recession. Unemployment is at a record 10.8%, while youth unemployment has reached freakish levels of 50% in Spain & Greece.
Markets are having a bad day after what has been a flattish period over the last 2 months. Considering the Dow's sharp run-up from the lows 6 months ago at 10.4K, some setbacks must be accepted. But this sell-off may be more serious. Considering the strength of the US recovery, it's difficult to imagine any rationale for a QE3. Why was it expected? Europe is going nowhere fast & the US economic recovery may be slowing. The jobs report on Fri will be especially important for the markets.
JPMorgan Chase Capital XVI (AMJ)
Treasury yields:
U.S. 3-month | 0.071% | |
U.S. 2-year | 0.345% | |
U.S. 10-year | 2.239% |
| CLK12.NYM | ...Crude Oil May 12 | ...102.78 | ... 1.23 | (1.2%) |
| GCJ12.CMX | ....Gold Apr 12 | .........1,624.20 | ... 45.80 | (2.7%) |
Get the latest daily market update below:
Photo: Bloomberg
Private companies continued to add jobs in Mar, but at a slightly slower pace than in Feb. Businesses added 209K, according to a report issued by ADP (lower than the forecast of 217K & marked a slowdown from 230K private sector jobs added in Feb). Strong jobs data throughout the winter has been partially attributed to unseasonably warm weather, which allows some firms (i.e. construction) to remain fully operational during colder months. Once that effect fades, job creation could weaken. Small businesses continued to drive job growth. Companies with fewer than 50 employees made up about half of all private sector job gains, hiring 100K. Large companies with 500 or more employees hired 22K new workers & medium-sized businesses added 87K to their payrolls. The ADP report typically sets the tone for the gov highly anticipated monthly jobs report on Fri. While the reports tend to show the same trends over the long term, their figures can diverge from month to month.
Company Payrolls in U.S. Grow by Estimated 209,000 Workers
ECB President Draghi said it was premature to talk about withdrawing the bank's massive emergency loans to banks given slack economic conditions & record high levels of unemployment across the 17-country eurozone. Draghi spoke after the ECB left its key interest rate unchanged at the record low of 1%. He said the bank was still sizing up the "powerful and complex" effects of the €1T ($1.3T) in loans it handed out in 2 batches to banks in Dec & Feb. He added that the 2nd round of the loans came too late to appear in the recent economic data the bank has to consider but stressed that the onus was on govs to push thru economic reforms that will help revitalize their economies. "So it's necessarily a partial analysis that we are having today," he said. "Given the present conditions of output and unemployment, which is at an historical high, any exit strategy talk is premature." The eurozone economy shrank 0.3% in Q4 & indicators for future growth indicators remain weak, raising the likelihood that the economy shrank again in Q1, creating the technical definition of recession. Unemployment is at a record 10.8%, while youth unemployment has reached freakish levels of 50% in Spain & Greece.
Markets are having a bad day after what has been a flattish period over the last 2 months. Considering the Dow's sharp run-up from the lows 6 months ago at 10.4K, some setbacks must be accepted. But this sell-off may be more serious. Considering the strength of the US recovery, it's difficult to imagine any rationale for a QE3. Why was it expected? Europe is going nowhere fast & the US economic recovery may be slowing. The jobs report on Fri will be especially important for the markets.
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