US Job Market Slows Down
The labor market in the US has been a key factor driving the country’s economic growth. However, on April 4, 2023, the S&P 500 closed down by 0.6% as new data showed that the labor market was slowing down. On April 5, 2023, the US stock market experienced mixed results as private-sector job growth slowed down and the US service sector experienced a deceleration in growth. The S&P 500 lost 0.32%, while the Dow Jones Industrial Average added 0.15%, and the Nasdaq Composite dipped 0.88%. Meanwhile, the yield on the 10-year note slid to 3.287% as treasury yields moved down sharply in response to the weak ADP payrolls report. Gold futures are hovering near their highest level in over a year, amid signs of softening in the labor market.
Understanding the Job Openings and Labor Turnover Survey (JOLTS)
The Job Openings and Labor Turnover Survey (JOLTS) is a monthly report released by the US Bureau of Labor Statistics that provides information about job openings, hires, and separations in the US labor market. The report measures the health of the labor market and provides insights into employment trends, which can impact investor sentiment and the performance of the stock market.
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What is JOLTS?
JOLTS is a survey that collects data from a sample of about 16,000 nonfarm establishments across the US. The survey asks employers about the number of job openings, hires, and separations that occurred during the reference month. It also collects information on the industry, region, and occupation of the job openings and hires. The survey covers both private and public sector jobs and excludes agriculture, forestry, fishing, and hunting.
Why is JOLTS important for investors?
JOLTS is important for investors because it provides a detailed view of the US labor market, which is a key driver of economic growth and corporate earnings. Investors use JOLTS data to gauge the strength of the job market, which can impact consumer spending, business investment, and the overall performance of the economy. Strong job growth can boost investor confidence and lead to higher stock prices, while weak job growth can signal economic weakness and lead to lower stock prices.
Job Openings Under JOLTS
JOLTS also provides information on the number of job openings, which can be an indicator of labor shortages and wage pressures. When the number of job openings is high, employers may struggle to find qualified workers, which can lead to higher wages and inflation. This can have a ripple effect on the economy and the stock market, as investors may worry about the impact of rising inflation on corporate profits and interest rates.
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JOLTS Data and Stock Market Performance
JOLTS data can impact the stock market in different ways, depending on the context and the interpretation of the data. For example, if JOLTS reports a higher-than-expected number of job openings, investors may interpret this as a positive sign for the economy and the stock market. Higher job openings can lead to more hiring, which can boost consumer spending and corporate earnings. On the other hand, if JOLTS reports a lower-than-expected number of job openings, investors may interpret this as a negative sign for the economy and the stock market. Lower job openings can indicate a weaker labor market, which can lead to lower consumer spending and corporate earnings. JOLTS is an important tool for investors who want to stay informed about the health of the US labor market and its impact on the stock market. By tracking JOLTS data, investors can gain insights into the direction of the economy and make informed investment decisions.
JOLTS Raising Concerns of Economic Slowdown
According to (JOLTS), US employers reported 9.93 million job openings in February, down from over 10.5 million in January and significantly weaker than the consensus forecast of 10.5 million. This is a cause for concern, as similar rollovers and drawdowns of similar magnitude in the number of job openings since 2000 were associated with recessions.
Increases in Jobs Are Lower Than Normal
On April 5, companies added 145,000 jobs in March, lower than consensus estimates of 210,000. This indicates that employers are pulling back, and the economy is slowing. Payroll processing firm ADP reported that “Our March payroll data is one of several signals that the economy is slowing. Employers are pulling back from a year of strong hiring and pay growth, after a three-month plateau, is inching down.” This has led to concerns that the US economy might be headed towards a slowdown or even a recession.
US Service Providers Experience a Deceleration in Growth
Growth at US service providers decelerated in March as the Institute for Supply Management’s services activity index fell to 51.2, lower than the consensus estimates of 54.4. Additionally, employment continues to expand but slipped to 51.3 for the month. New orders dropped from 62.6 to 52.2 in March, while prices receded from 65.6 to 59.5. This indicates that while the service sector continues to expand, the pace of growth is slowing down.
Investors Keep an Eye on Walmart’s Investor Meeting
Walmart’s (WMT) two-day investor meeting has been a key focus for investors. As one of the largest retailers in the US, Walmart’s performance is often seen as a good indicator of the health of the consumer sector. Investors are closely monitoring the meeting to gain insight into the company’s outlook and to assess the health of the US consumer sector.
Johnson & Johnson Offers $8.9 Billion to Settle Cancer Lawsuits
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Bank Stocks Slide
Bank stocks slid on April 4, with the KBW Banks Index (^BKX) down by 2%. The worst performers were First Republic (FRC), KeyCorp (KEY), and Comerica (CMA), which were all down by more than 5%. They appeared poised as the turmoil has acclimated them for months on end.
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Investors Analyze JOLTS Data and Service Sector Growth
On April 5, 2023, the US stock market saw mixed results amidst concerns over a slowdown in the labor market and a deceleration of growth in the service sector. Private-sector job growth and the US service sector experienced a deceleration in growth, leading to a drop in the S&P 500 by 0.32%, while the Dow Jones Industrial Average gained 0.15%, and the Nasdaq Composite dropped 0.88%. Moreover, the yield on the 10-year note slid to 3.287%, as treasury yields moved down sharply in response to the weak ADP payrolls report. JOLTS data, which provides information about job openings, hires, and separations in the US labor market, has raised concerns of economic slowdown. JOLTS data is critical for investors because it gives a detailed view of the US labor market, which is a key driver of economic growth and corporate earnings. JOLTS data can impact the stock market positively or negatively, depending on the context and interpretation of the data.
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