Dow slid 151, decliners over advancers better than 3-2 & NAZ dropped 168. The MLP index was off 2 to the 311s & the REIT index was off 7+ to the 412s. Junk bond funds eased higher & Treasuries saw more selling which brought higher yields. Oil was flattish in the 66s & gold gave back 6 to 2919.
Dow Jones Industrials
Pres Trump's efforts to pare down the federal gov workforce left a mark on the labor market in Feb, with announced job cuts at their highest level in nearly 5 years, outplacement firm Challenger, Gray & Christmas reported. The firm reported that US employers announced 172K layoffs for the month, up 245% from Jan & the highest monthly count since Jul 2020 during the heightened uncertainty from the Covid pandemic. In addition, it marked the highest total for the month since 2009 during the global financial crisis. More than 1/3 of the total came from billionaire entrepreneur Elon Musk's efforts, with Trump’s blessing, to reduce the federal headcount. Challenger put the total of announced federal job cuts at 62K, spanning 17 agencies. “With the impact of the Department of Government Efficiency [DOGE] actions, as well as canceled Government contracts, fear of trade wars, and bankruptcies, job cuts soared in February,” Andrew Challenger, the firm's workplace expert, said. Jan's planned reductions brought the total thru the first 2 months of the year to 222K, also the highest for the period since 2009 & up 33% from the same time in 2024. The report comes amid heightened concern about the state of the labor market & the economy in general as Trump's plans for tariffs, slashing the size of gov & mass deportations & stringent immigration restrictions take shape. There has been a slew of mixed indicators about where things are heading, with consumer surveys showing concern over inflation & layoffs while other data shows economic strength continuing. Payrolls processing firm ADP reported yesterday that private sector hiring grew by just 77K in Feb. According to the Challenger report, it's not just gov cutting back. Retail saw 39K cuts for the month as companies such as Macy's & Forever 21 announced sharp staff reductions. The sector's cuts in 2025 are up nearly sixfold from where they were in 2024. Technology firms also listed another 15K in reductions, though the sector's cuts are actually lower from a year ago. On the upside, firms announced plans in Feb to hire a total of 35K new workers, putting the year to date total up 159% from a year ago.
Layoff announcements soar to the highest since 2020 as DOGE slashes federal staff
Philadelphia Federal Reserve Pres Patrick
Harker said that trouble may be brewing for a US economy
that is currently in good shape but showing signs of stress in the
consumer sector & risks to the inflation outlook. "Unemployment
still low, still getting growth, but there are threats to this. We're
starting to see that confidence is starting to wane" on both the
consumer & business fronts, Harker said. While inflation has been retreating, "I'm worried
that right now that is at risk, that decline is at risk," he said, while
adding it's still his expectation that price pressures will continue to
retreat. Harker also said there is mounting evidence that the consumer
sector is "under stress," especially for those who aren't wealthy. While
Harker did not say what he thinks the central bank should do with
interest rates in this environment of uncertainty, he added "I'm an
avowed pragmatist when it comes to policy" & in highly uncertain
periods, "you don't go very fast in either direction." He
spoke as Trump administration policies roil the economy & markets &
kindle fears of a resurgence in inflation & slowdown in economic
growth. Markets have been pricing in more Fed rate cuts this year amid
worries about growth and hiring. Harker, who is
due to retire from his position at the Philadelphia Fed later this
year, also said he's worried about gov borrowing & the $'s
ongoing role as the world's reserve currency. He said the currency's
status is underpinned by the rule of law, but sees threats on that
front. When it comes to keeping the $ strong, "that's not one I
lose sleep over right now, but I'm starting to worry more and more."
Fed's Harker sees warnings signs for the US economy
Treasury yields moved higher as investors breathed a sigh of relief over the potential for tariff exemptions & awaited key jobs data. The benchmark 10-year Treasury yield climbed almost 2 basis points to 4.284% & the 2-year Treasury yield was slid more than 3 basis points to 3.957%. 1 basis point is equal to 0.01%, & yields & prices move in opposite directions. Investors are feeling optimistic about the possibility of future tariff exemptions after The White House announced a 1-month delay to tariffs on automakers whose cars comply with the US-Mexico-Canada Agreement. “Reciprocal tariffs will still go into effect on April 2, but at the request of the companies associated with USMCA, the president is giving them an exemption for one month so they are not at an economic disadvantage,” Press Secretary Karoline Leavitt said on behalf of Pres Trump. This was after Trump implemented 25% tariffs on imports from Canada & Mexico on Tues, as well as an additional 10% duty on China. Canada, Mexico & China have said they will respond with reciprocal measures as a result. Investors will also be watching the big data release of the week, non-farm payrolls, due tomorrow. That comes after the volume of unemployment claims came in lower than economists anticipated today.
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