“Houston, we have an econ data problem”
Dow 12,393 (-.21%) S&P 1,310 (-.23%)
There’s an old British saying kicked around Wall Street that investors should “sell in May and go away.” The idea here is to pocket what you’ve made in the market and take the summer off. With both the Dow Jones Industrial Average and the S&P 500 stock indices losing 6% this month (the Dow’s biggest monthly declines in 2 years) it looks like investors chose to aggressively hit the beach on May 1. A heavy serving of US econ data broadly disappointed today, sending markets down early. Although more Greek polling results showed pro-Eurozone parties gaining before their June election clawed stocks back up in the afternoon, the Dow still finished down 26 points to end a bloody May.
ADP reports fewer jobs added in May than expected, weekly jobless claims rise
Morning jobs news was an unwelcome 8:30am punch to breakfast-filled guts. Payroll tracking company ADP reported that the US added 133,000 private sector jobs in May, below expectations of 150,000. ADP’s calculation (usually released on Wednesday, but moved to Thursday because of this shortened Memorial Day week) is closely watched as a preview to the official Labor Department Employment Report on the first Friday of every month (tomorrow). Although the ADP number is usually off from the government’s measurement, last month’s was right on target, so analysts are paying close attention. On top of this, weekly jobless claims rose by 10,000 to reach 383,000 total. This measurement of Americans filing for unemployment won’t have an impact on tomorrow’s major employment report, but does further indicate a slowdown in the recovering labor market.
US Commerce department announces 1st Quarter GDP growth was 1.9%, down from earlier 2.2% estimate
Investors were already concerned about slowing economic growth in the US when the Commerce Department estimated in April that Gross Domestic Product (GDP) grew 2.2% for the January – March 1st quarter period, but today the federal government erased the 2.2 and penciled in 1.9%. GDP is the broadest measure of economic activity, comprised of all the purchases and sales of goods and services occurring in a country (excluding drug and other illegal transactions Uncle Sam doesn’t know about) and today’s smaller growth number further stoked fears that the US economy is relapsing to its dark recession days (the Marketsnacks team is deciding a time/place for an intervention – we hope you’ll be there for your economy). Historically, American GDP grows around 3%, but economists and politicians alike are targeting higher rates to climb ourselves out of the deep economic hole dug during the financial crisis.
Tomorrow:
- The US Government Non-Farm Payroll report releases at 8:30. Investors are locked and loaded to act on any surprises…analyst consensus predicts 150,000 jobs were added to the economy in May, up from 115,000 in April. The official unemployment rate is also announced, can it drop south of the current 8.1%?
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