Signs Point to Weak NFPs Report, We Wait, We See…

Signs Point to Weak NFPs Report, We Wait, We See…

$DIA, $SPY, $QQQ, $RUTX, $VXX

US stocks recover from oversold condition, soft data boosts rate-cut expectations.

The recent ADP job numbers suggest that employers are either having difficulty filling positions, are hiring fewer people due to weaker demand, or both.

  • The lowest manufacturing jobs gauge since Y 2016.
  • Slower private hiring.
  • A sharp drop in small-business hiring plans, and
  • The worst US services-employment index in 5 years.

That is the backdrop from 3 days of disappointing data heading into Friday’s September jobs report from the US Labor Department.

Analysts are bracing for more downbeat figures, with their pessimism for payrolls on par with times when hurricanes slammed the country in Y 2017 or when the federal government shutdown in Y 2013

But now, Wall Street economists see a more persistent storm formed up: The trade dispute, and manufacturing recession. Those factors are starting to permeate the economy at a time when companies are already struggling with a shrinking pool of qualified workers.

The combination of forces has pushed down the median estimate for private payrolls to a gain of just 130-K last month. That is the weakest projection heading into a jobs report in 7 years, sans the months affected by events such as major storms or the shutdown.

Estimates for total NFPs (nonfarm payrolls) are higher, at 145-K, because of an expected boost from temporary census hiring.

A reading that comes in even weaker than predicted would lock in investor expectations that the Fed will cut interest rates on 30 October for a 3rd straight meeting. Plus, boost chances of another reduction in December, completing a reversal of all 4 hikes from Y 2018.

Traders have increased bets this week on Fed rate cuts after the run of weak reports led by surveys from the Institute for Supply Management (ISM) covering manufacturing and non-manufacturing industries. Indicators from IHS Markit, the ADP Research Institute and the National Federation of Independent Business also showed some cooling.

Thursday, the major US stock market indexes finished at: DJIA+122.42 at 26201.04, NASS Comp +87.02 at 7872.27, S&P 500 +23.02 at 2910.67

Volume: Trade on the NYSE came in at 801-M/shared exchanged,

  • NAS Comp +18.6% YTD
  • S&P 500 +16.1% YTD
  • DJIA +12.3% YTD
  • Russell 2000 +10.2% YTD

HeffX-LTN’s overall technical outlook for the major US stock market indexes is Neutral with a Bearish bias.

Have a terrific weekend.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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