Futures are under considerable pressure ahead of the open (Dow Futures down -150 points) after a very lackluster March employment report. The economy generated just 88,000 jobs in March – the smallest gain in 10 months – and more people dropped out of the labor force, adding to a fresh pile of evidence that the pace of hiring in the United States has slowed. The unemployment rate fell a tick to 7.6% from 7.7%, the lowest rate since December 2007, but the decline stemmed from fewer Americans looking for work, according to Labor Department data. The jobs report fell well short of Wall Street forecasts.
U.S. futures were down ahead of the data by -100 points, with overseas markets very weak with the exception of Japan (Hang Seng off -3% and European indices off roughly -2%, while the Japanese Nikkei up nearly +2% on continued BoJ stimulus enthusiasm).
The consensus estimate was for 200,000 nonfarm payrolls, according to Reuters, but the whisper number came in about 50,000 lower, and some economists yesterday were still lowering their forecasts due to weaker jobs-related data in the days ahead of Friday’s release. The employment report was also widely expected to show the unemployment rate stayed unchanged at 7 .7 percent.
Additional Key Market Notes Today:
– U.S. Trade Gap Narrows Unexpectedly In February – U.S. trade deficit narrowed by 3.4% in February to $43.0 billion, the Commerce Department said Friday. Economists had expected the trade gap to widen to $45 billion. Exports rose in February while imports were virtually unchanged.
– Consumer Credit Data – February consumer credit data, out at 3 PM ET, is the final release of the day. Economists predict that credit expanded by $15 billion in February after a $16.15 billion rise in January.
– S&P 500 Volatility – The S&P 500 has alternated between gains and losses for 12 straight sessions, which matches a record dating back to 1981.
– Flight To Safety – U.S. Treasury yields have now hit their lowest levels of the year. The 10-year yield is down to 1.75 on weaker than expected economic data earlier this week, with bond prices surging on today’s weak employment data.
– Gold Surges – May gold surged $17.90, or 1.1%, to $1,568.90 oz on the weak jobs data, and expectations for further easy monetary policy from the Fed.