Markets waver on tariff uncertainty and weak jobs data

Dow was off 76, decliners barely ahead of advancers & NAZ pulled back 86.  The MLP index retreated 5+ to 311 & the REIT index eased back 1+ to 414.  Junk bond funds were mixed & Treasuries had a little selling which lifted yields.  Oil dropped a big 2+ to the 65s & gold rose another 15 to 2936.

Dow Jones Industrials

Companies in the private sector added just 77K jobs in Feb, payroll processing firm ADP said.  The figure, the lowest since Jul, is well below the estimate for 140K jobs & also more than the prior month's upwardly revised reading of 186K.  Annual pay was up 4.7%, the same as the prior month.  "Policy uncertainty and a slowdown in consumer spending might have led to layoffs or a slowdown in hiring last month," said Nela Richardson, ADP's chief economist.  "Our data, combined with other recent indicators, suggests a hiring hesitancy among employers as they assess the economic climate ahead."  Leisure & hospitality added 41K positions, leading job creation in Feb.  Professional & business services added 27K jobs, while financial activities & construction each contributed 26K.  Manufacturing & other services added 18K & 17K jobs, respectively.  On the negative side, trade, transportation & utilities lost 33K jobs in Feb, education & health services decreased by 28K & information services lost 14K.  Natural resources & mining jobs decreased by 2K.  Large businesses, those with 500 or more employees, added 37K jobs in the month.  Businesses with 50 - 499 employees hired 46K workers.  Establishments with fewer than 50 employees lost 12K jobs.

Private sector job growth falls well below expectations

Commerce Secretary Howard Lutnick signaled a possible agreement between the Trump administration & leaders of Canada & Mexico that could see some of the tariffs imposed on both nations rolled back.  Canada & Mexico, 2 of the US' biggest trading partners, have imposed retaliatory tariffs following those imposed by Pres Trump that went into effect yesterday.  Trump said the increases were in response to both countries not doing enough to curb the flow of illegal immigration & illicit drugs across their borders with the US.  Yesterday Lutnick said host that Trump will likely look to meet America's neighbors in the middle with a focus on the US-Mexico-Canada Agreement (USMCA), which was created to create fairer trade between the nations.  "He's really looking carefully at that trying to figure out if there is a way in there that he can come in the middle, where he can give the Canadians and Mexicans something, but they have to got do more," he said.  "They've got to end fentanyl death. You can't just say it's OK that people can die. That is just not a thing."  "It's not gonna be a pause. None of that pause stuff. But I think he's going to figure out, you do more, and I'll meet you in the middle someway," he added.  "We're going to probably be announcing that tomorrow. So somewhere in the middle will likely be the outcome — the president moving with the Canadians and Mexicans but not all the way," he continued.  The secretary said the administration has made its concerns about the border & illegal drugs known to Canadian & Mexican officials.  "He's really looking carefully at that trying to figure out if there is a way in there that he can come in the middle, where he can give the Canadians and Mexicans something, but they have to got do more," he said.  "They've got to end fentanyl death. You can't just say it's OK that people can die. That is just not a thing."  "It's not gonna be a pause. None of that pause stuff. But I think he's going to figure out, you do more, and I'll meet you in the middle someway," he added. "We're going to probably be announcing that tomorrow. So somewhere in the middle will likely be the outcome — the president moving with the Canadians and Mexicans but not all the way," he noted.  The secretary said the administration has made its concerns about the border & illegal drugs known to Canadian & Mexican officials.  "If you respect us as your best trading partner, end it," he added.  "And you have got to end fentanyl. And the way we're going to describe fentanyl is very simple — autopsied American guts. It's got to end."  Effective yesterday, US imports from China, the 3rd-largest US trading partner, became subject to a new 10% tariff on top of the initial 10% tariff he imposed on Chinese goods last month.

Trump commerce secretary hints at trade compromise with neighbors

New orders for US-manufactured goods rebounded in Jan amid a surge in commercial aircraft bookings, but the broader manufacturing sector's recovery is likely to be hampered by tariffs on imports.  Factory orders increased 1.7% after a revised 0.6% decline in Dec, the Commerce Dept's Census Bureau said.  The forecast had factory orders increasing 1.6% after a previously reported 0.9% drop in Dec.  Factory orders advanced 3.5% on a year-on-year basis in Jan.  Manufacturing, which accounts for 10.3% of the economy, has been showing tentative signs of recovery after being undercut by the Federal Reserve's aggressive interest rate hikes in 2022 & 2023.  But a trade war, triggered by Pres Trump's new 25% tariffs on imports from Mexico & Canada, which took effect yesterday, along with a doubling of duties on Chinese goods to 20%, is seen snuffing out the recovery.  Domestic manufacturers rely heavily on imported raw materials & the duties are expected to increase production costs, which are then passed on to buyers of the finished products.  An Institute for Supply Management survey on Mon showed fears about import levies dominated responses from manufacturers in Feb as well as discussions about who will pay for tariffs.  Civilian aircraft orders soared 94% in Jan after dropping 29% in Dec.  Orders for motor vehicles & parts decreased 1.5%.  Transportation equipment orders rebounded 9.9%.  Excluding transportation equipment, factory orders gained 0.2%.

US factory orders rebound in January on commercial aircraft

Stocks are drifting lower with selling in the last hour.  Traders are uncertain about a rebound after a sharp sell-off, amid hopes that Pres Trump could soon scale back his new tariffs on Canada & Mexico.  Soft data on labor-market hiring revived worries about a slowdown in Canada & Mexico.