Five triple-digit moves in the Dow Industrials provided for a tumultuous week. When the dust settled, the average was down 0.7% or 170 points. The S&P 500 surrendered 1.4% and the technology battered NASDAQ was negative by over 2%. To blame for the weakness in equities, concern of a full-blown trade war with China topped the list. And a weaker-than-expected March job’s report added to the 572-point decline on Friday. There were few places to hide, with only consumer staples showing some offset to major declines in trade-related industrials and tech, each lower by 2.2%.
The U.S. added a mere 103,000 jobs last month, well below the expected 193,000, leaving the unemployment rate at 4.1%. Average wage growth, however, ticked higher – up 2.7% year-over-year. Markets reacted little to the news that February’s employment number posted an upward revision and the longer-term trend of strong job growth looked intact. The headline numbers did little to calm Fed watchers, with a succession of interest rate moves on tap for the next few years. Overall, we remain in a nice comfort zone, where GDP growth, supported by gains in key consumer and industrial markets, resilient housing demand and greater take-home pay for most Americans, is likely to remain in a solid uptrend through 2019.
Traders, however, remain unimpressed and are reluctant to bid up prices until the first quarter earning’s season shows its face. This week, Delta Air Lines will report on Thursday with estimates of $0.73 per shares vs. $0.77 a year-ago. On Friday, a slew of big banks are scheduled to report results, including JPMorgan Chase ($2.27 compared to $1.44 per share last year). Volatility will continue as the tit-for-tat tariff war of words continues. Hence, an increasingly cautious approach to stock selection remains prudent for now.
Here is the answer to last week’s trivia question: The current Chair of the Federal Reserve Bank is Jerome Powell. The position was held from August 11, 1987 to January 31, 2006 by? Ben Bernanke, Alan Greenspan, Paul Volker or Arthur F. Burns. Answer: Alan Greenspan.
Today’s Trivia Question: The tagline “Building America” belongs to which American company? Construction equipment manufacturer Caterpillar; engineering service provider Granite Construction; home builder Toll Brothers; or rail company Union Pacific.