Dow went up 103, decliners over advancers 2-1 & NAZ crawled up 3. The MLP index was even in the 225s & the REIT index fell 3 to 370. Junk bond funds edged higher & Treasuries were very heavily purchased, sharply reducing yields (more below). Oil was fractionally higher to the 76s & gold shot up another 27 to 1861.
AMJ (Alerian MLP Index tracking fund)
US hiring grew in Feb by more than expected as the labor
market remained surprisingly resilient in the face of rising interest
rates & higher inflation. Employers added 311K jobs
in Feb, the Labor Dept said in its monthly payroll
report, easily topping the 205K jobs forecast. It marked the 2nd straight month of
hotter-than-expected job data, after the economy added 504K positions
in Jan, a total that was revised down from the initially reported
517K. The unemployment rate, meanwhile, unexpectedly ticked higher to 3.6% as the labor force grew. While monthly jobs data is always important, the
Federal Reserve is closely watching this particular report for signs the labor market is finally softening & that the blowout figures in Jan were an anomaly as policymakers try to cool the inflation with higher interest rates. There
was some welcoming news on that front, with monthly wages rising at the
slowest pace in a year. Average hourly earnings grew 4.6% from a year
ago, below the estimate for 4.8%. The monthly increase of 0.2% also was
below the 0.4% estimate. The latest hiring figures underscore the delicate challenge facing the
Fed, which could ultimately have no choice but to continue hiking rates. Chair Jerome Powell has lauded the slow but steady decline in inflation,
but told reporters at the conclusion of the Feds 2-day meeting on
Wed that the labor market remains "extremely tight" & is still
"out of balance." Hiking interest rates tends to create higher rates on consumer & business loans, which slows the economy by forcing employers to cut back on spending.
US job growth surges in February as Fed rate hikes intensify
Treasury yields fell as worries over regional bank SVB Financial 's sparked a flight to safer assets such as gov bonds. The 2-year Treasury note yield dropped more than 26 basis points 4.637%. Earlier this week, it traded above the key 5% level. The benchmark 10-year note yield, meanwhile, fell 21 basis points to 3.712%. Yields & prices move in opposite directions & one basis point equals 0.01%. Yields were also down after the release of new US wage growth data, which pointed to potentially easing inflation. Average hourly earnings increased by 0.24% last month, the Labor Dept reported. That's lighter than the 0.4% increase expected. The unemployment rate also ticked higher to 3.6% from 3.4% previously, also adding credence to the argument that the job market was cooling a bit despite the better-than-expected payrolls number. The Federal Reserve has been hiking interest rates in an effort to cool the economy, including the labor market & ease inflation. The data comes as investors consider the Fed's next interest rate policy moves. Many are expecting the central bank to increase the pace of rate hikes again & announce a 50 basis point increase at its next meeting later this month.
Treasury yields post big decline as investors make a flight to safety of bonds
Gap (GPPS) reported disappointing holiday-qtr results & announced
a series of exec changes as the struggling retailer continues to
search for a permanent CEO. The
company reported net losses of 75¢ a share, for
the 3 months that ended Jan 28, compared with a loss of 4¢ a share a year earlier. Sales
were $4.24B, down 6% from $4.53B a year earlier. Comparable
sales were down 5% year-over-year & store sales dropped 3%. Online
sales, which represent 41% of total net sales, plummeted 10% compared to
last year. The apparel retailer — which includes its namesake brand, Old Navy, Banana Republic & Athleta — has had a rough year
as it grappled with numerous net losses, bloated inventory levels & a
search for a permanent CEO. Interim CEO Bob Martin said the board has narrowed its search & the
next chief exec will be an external candidate. GPS issued a muted outlook for fiscal 2023. It plans to close 50-55 Gap & Banana Republic stores & open 30-35 Athleta & Old Navy
stores. It also expects Q1 net sales to decrease in the
mid-single digit range compared to the prior fiscal year & expects
fiscal 2023 net sales to decrease in the low to mid-single digit range. It does, however, expect gross margins to expand in Q1 & during the year. The outlook was based on “the continued uncertain consumer and macro environment,” the company added. The stock fell 56¢.
If you would like to learn more about GM, click on this link:
club.ino.com/trend/analysis/stock/GM=6ae5b6f7
Gap announces big loss, declining sales and executive shakeup
These are trying times for investors. The hiring data is encouraging for the economy. However this signals that the Fed has more to do by raising interest rates to get inflation under control. Investors are heavily buying safe haven gold & Treasuries. Dow keeps trending sideways near 33K.Dow Jones Industrials
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