Markets hesitate after jobs report and with Powell on deck

Dow dropped 180, decliners slightly ahead of advancers & NAZ retreated 138.  The MLP index was steady in the 309s & the REIT index hardly budged in the 409s.  Junk bond funds were little changed & Treasuries had limited buying which allowed yields to slip.  Oil recovered 1 to the 67s on reports the US is planning to refill its oil reserve & gold slid back 7 to 2919.

Dow Jones Industrials

The US economy added jobs at a slower pace than expected in Feb, giving the Federal Reserve more labor market data to consider as it prepares to meet later this month.  The Labor Dept reported that employers added 151K jobs in Feb, below the estimate of 160K jobs.  The unemployment rate was 4.1%, slightly higher than expectations that it would remain at 4%.  The number of jobs added in the prior 2 months were both revised, with job creation in Dec revised up by 16K from a gain of 307K to 323K; while Jan was revised down by 18K from a gain of 143K to 125K.  Taken together, the revisions reduce previously reported employment by 2K jobs.  Private sector payrolls added 140K jobs in Feb, slightly below the 142K estimated.  Federal gov employment declined by 10K jobs in Feb as the Dep of Gov Efficiency (DOGE) began to make cuts.  Across all levels of gov, employment increased by 11K, with state govs adding 1K jobs & local govs 20K jobs to more than offset the federal job losses.  Manufacturing added 10K jobs, above the estimate for a 5K gain & the retail sector shed 6K jobs in Feb & employment in the sector has shown little net change over the past year.  The labor force participation was 62.4%, having changed little over the last year & falling slightly from the 62.6% reported in Jan.  The number of people considered to be long-term unemployed, defined as being jobless for 27 weeks or more, was 1.5M – slightly higher than the 1.4M reported last month.  The long-term unemployed accounted for 20.9% of all unemployed people.  The number of workers employed part-time for economic reasons rose by 460K to 4.9M.  These workers would've preferred full-time work but were working part-time because their hours were reduced, or they could not find full-time jobs. 

US economy added 151,000 jobs last month, below expectations as the federal workforce shrinks

Treasury Secretary Scott Bessent acknowledged some signs of weakness in the US economy.  “Could we be seeing that this economy that we inherited starting to roll a bit? Sure. And look, there’s going to be a natural adjustment as we move away from public spending to private spending,” Bessent added.  “The market and the economy have just become hooked. We’ve become addicted to this government spending, and there’s going to be a detox period,” he continued.  Describing the economy as inherited is a reference to the administration under then-Pres Biden.  Under Biden, the US saw generally strong economic growth.  However, there were signs of a slowdown in late 2024, & inflation remained above the Federal Reserve's 2% target.  In its first few months, the Trump administration has taken steps to reshape global trade policies & to reduce the federal workforce.  There has not been much hard economic data reflecting Trump’s term, though consumer surveys have shown a decline in confidence.  One area where Trump's policies could be felt quickly are tariffs.  The pres has hit Canada, Mexico & China with tariffs in his first 2 months in office, though the Canada & Mexico efforts now have a lengthy list of exemptions.  The administration plans to implement broader tariffs in Apr.  “Tariffs are a one-time price adjustment,” Bessent said, pushing back against the idea that tariffs would fuel continued inflation.  Bessent also said the administration was “not getting much credit” for areas where costs have fallen since Trump’s inauguration, such as oil prices & mortgage rates.

Treasury Secretary Bessent says economy could be ‘starting to roll a little bit’

Treasury yields fell as investors digested a Feb nonfarm payrolls report that showed weaker-than-expected jobs growth.  The benchmark 10-year Treasury yield dropped more than 2 basis points to 4.261% & the 2-year Treasury yield was down more than 3 basis points at 3.931%.  1 basis point is equal to 0.01% & yields & prices move in opposite directions.  “Friday’s jobs report may change the calculus for the Federal Reserve’s plans on interest rates this year, and it’s possible that we see the next rate cut come as soon as June,” said Glen Smith, chief investment officer at GDS Wealth Management.  Federal Reserve Chair Jerome Powell is expected to speak later in the day, which investors will monitor closely for hints about future monetary policy.  Traders are also mulling Pres Trump's latest tariff reprieve.  Goods imported from Canada & Mexico into the US, & which comply with the North American trade agreement known as the USMCA, will be temporarily excluded from 25% tariffs, a White House official said.  The reprieve will last until Apr 2.  “Markets are all over the place trying to price tariff impacts, which is really hard to do when the goal post moves, disappears, and morphs by the second,” said Jamie Cox, managing partner at Harris Financial Group.

10-year Treasury yield falls after weaker-than-expected jobs growth

Stocks stumbled as investors assessed the crucial monthly jobs report amid market uncertainty driven by Pres Trump's volatile trade policy.  The stakes were high for Feb's job report as stocks flounder amid fears of weakening economic growth.