"The Easter Bunny takes a break from the trading floor - but still reflects upon March employment numbers."
Dow 13,060 (–%) S&P 1,399 (–%)
So what happens when the most important economic announcement of the month coincides with a national holiday? Do traders’ computers explode Y2K-style and spreadsheets swallow themselves in some kind of freak black-hole reaction? The eagerly-anticipated, big boy serving of American econ data, the Labor Department’s monthly employment report, is the focus of investors every four weeks because it contains the government’s official unemployment and payroll numbers – but since it’s released the first Friday of every month and Good Friday occurs at different weeks each year, today was a unique situation in which the New York Stock Exchange was closed when the major labor news was announced. MarketSnacks has you covered….
Labor Department reports US added 120,000 non-farm jobs, unemployment down to 8.2%
In the mother of all economic reports, the Labor Department announced that the US added 120,000 non-farm jobs in March after last month’s increase of 227,000 and the unemployment rate ticked down to 8.2% from 8.3%. Although the payrolls growth is a positive development and the unemployment rate was only expected to remain unchanged, this is the smallest increase in 5 months and falls short of the roughly 200,000 that economists forecasted. And analysts point out that the jobless rate partially dropped because so many unemployed looking for work simply left the labor force. The news highlights Federal Reserve Chairman Ben Bernanke’s concerns expressed earlier this week that the stock market’s recent rally since this fall will not be sustained without continued economic recovery (the Federal Reserve has planned to keep interest rates low to encourage borrowing and economic growth). Investors who are members of the futures market had a 45-minute window from 8:30-9:15 only on the Chicago Mercantile Exchange to trade early in the morning right after the announcement and initial reactions to the mixed news were somewhat negative.
“Week in Review”
Last week capped the best first quarter in the history of many stock indices, but this week investors panicked that they had overindulged. When the minutes of the March Federal Reserve Meeting revealed that 1) Bernanke is not convinced that our economy is in the clear and 2) the Fed would not implement any more growth policies, investors pulled back. But the last two days, the markets have been haunted by Spain’s increasing borrowing costs. The yields on Spanish 10 year bonds (the amount of interest that investors demand to lend to the country) have risen to 5.8% from just 5.4% earlier this week. This is a significant increase that indicates heightened investor concern in the European debt woes – the value of the Euro fell the most this week in 7 months. But Friday was circled on Wall Street calendars for weeks as investors wondered if the American labor market would continue its valiant charge. The reduction of the unemployment rate was nice, but fell for the wrong reasons.
Next Week:
- Investors can finally react to today’s critical economic news – will the markets trade down as expected?
- European markets are closed Friday and Monday for the Easter weekend - Will the prayers of the Spanish people be answered by investors in Europe when they come back from a 4-day weekend Tuesday?
© 2012 MarketSnacks
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