US stocks hovered near the flat line on Friday as investors entered the first trading day of the quarter and parsed new jobless data from Washington.
The S&P 500 erased earlier gains to fall to a session low, and the Dow Jones Industrial Average slipped below break-even. The Nasdaq Composite also struggled to find a direction as it oscillated around the flat line. The move comes as traders try to recover from the worst quarter for stocks since early 2020.
Investors on Friday are closely watching the monthly jobs report from the Department of Labor, the most up-to-date snapshot of hiring strength across the US economy US employers added 431,000 jobs in March. Consensus economists had expected nonfarm payrolls to rise by 490,000, according to Bloomberg data, slowing from February’s 678,000 rise but still marking an increase well above pre-pandemic trends. The unemployment rate fell to 3.6% compared to 3.7% expected, the lowest since February 2020.
Stocks advance into April after a volatile month and quarter of trading. The S&P 500 and Dow Jones each fell more than 4.5% during the first three months of 2022, closing out their worst quarters (and first quarterly declines) since the first quarter of 2020. The Nasdaq Composite saw the biggest drop, shedding 9.1% over the past three-month period as investors turned away from the technology and growth stocks that had led the market higher last year.
April has historically been a strong month for stocks and has actually produced a positive return for the S&P 500 in 15 of the last 16 years, according to Ryan Detrick of LPL Financial. This time, however, stocks are facing a variety of headwinds that may change this historically positive seasonality.
In other words, a confluence of concerns around the geopolitical and macroeconomic context contributed to the worst quarterly performance of stocks in two years and has not yet been fully resolved. Geopolitical risks have been elevated since the Russian invasion of Ukraine in late February, raising the specter of more entanglements in global supply chains that have already been struggling to recover from pandemic-era disruptions. A widespread rise in prices, and especially oil and energy prices, has further stoked concerns about the resilience of the consumer, the key driver of the national economy, going forward. And the Federal Reserve has begun a protracted process of raising interest rates and tightening financial conditions in a market that had become accustomed to accommodative monetary policy since 2020.
“I think investors are very happy that the quarter is over. It was tough. Obviously, inflation was bad all the way through… the end of the quarter,” Robert Cantwell, portfolio manager at Upholdings, told Yahoo Finance. Live on Thursday. . “And in all likelihood, the next four to six weeks will probably continue to be bad news because inflation is persistent and we’re still posting record growth rates from the first four months of last year.”
“That said, as you get into the second half of the next quarter, you could see a scenario where growth rates start to accelerate again as inflation moderates, and that has the potential to bring a lot of the bulls back. to the market,” he added. .
LPL Financial notes that corporate earnings may be another component driving the latest rally in stocks. Even in the face of war in Eastern Europe and decades-high inflation, earnings have held up and estimates for S&P 500 earnings per share for the next four quarters are higher in March. Although not much at 1.5%, the positive outlook is significant under the circumstances, particularly compared to how other countries have fared. Inflation is driving corporate profits more sizable as companies enjoy greater pricing power as they pass on higher costs to customers.
“In the wake of energy independence, the U.S. corporate earnings trajectory has been unaffected by rising energy costs and high inflation thus far,” said LPL Financial equity strategist, Jeffrey Buchbinder, adding that, by contrast, earnings expectations in international markets have fallen in March. “The US earnings outlook is the envy of the world right now.”
Elsewhere on the corporate front, meme stock darling GameStop revealed in a Form 8-K filed with the SEC after the chime on Thursday that the The video game retailer will seek approval for a stock split at its next shareholders’ meeting. GME is following a growing list of major companies: Alphabet, Amazon, Tesla, whatever could be the “summer of stock splits.” Stock splits are a corporate action taken to improve trading liquidity and make stocks more affordable without affecting market capitalization. GME jumped as much as 20% in extended trading to a 4-month high of over $200 a share after the news.
9:30 a.m. ET: Stocks rally after March jobs report
These were the main movements in the markets at the open on Friday:
S&P 500 (^GSPC): +12.54 (+0.28%) at 4,542.95
down (^ DJI): +74.62 (+0.22%) to 34,752.97
Nasdaq (^IXIC): +70.78 (+0.50%) to 14,291.30
Raw (CL=F): -$1.01 (-1.01%) at $99.27 a barrel
Gold (GC=F): -$23.10 (-1.18%) at $1,930.90 per ounce
10-year Treasury (^TNX): +9.9 bps for throughput 2.4260%
8:30 a.m. ET: New payrolls come in lower than expected
the The US economy posted another sizeable payroll gain in March as the labor market extends its strong and rapid recovery to bring employment back to pre-pandemic levels. US employers added 431,000 jobs, below the expected 490,000 jobs.
Meanwhile, the unemployment rate fell two tenths of one percent more than expected, approaching the record low of 3.5% seen in February 2020, said Mark Hamrick, senior economic analyst at Bankrate, although he noted that the rate of labor force participation remains 1 percentage point below its pre-pandemic level.
Labor force participation rose slightly to 62.4% after an unexpected jump to 62.3% in data last month indicated more people were returning to look for work or being placed in jobs after being sidelined by COVID-19.
“Beyond the positive snapshot in March, the outlook for next year is for further moderation in job creation,” Hamrick said in a note. Emboldened by exorbitantly high inflation, a hawkish Fed feels compelled to slam on the brakes. It’s hard to imagine how tightening won’t ultimately affect the labor market.
Thursday 7:14am ET: Futures charge higher to kick off April trading
These were the main moves in futures trading before the open on Friday:
S&P 500 Futures (EN=F): +22.00 points (+0.49%) at 4,552.75
dow futures (YM=F): +172.00 points (+0.50%) to 34,790.00
Nasdaq futures (NQ = F): +80.00 points (+0.45%) at 14,948.75
Raw (CL=F): +$0.14 (+0.14%) at $100.14 a barrel
Gold (GC=F): -$21.90 (-1.12%) at $1,932.10 per ounce
10-year Treasury (^TNX): 0.00 bps to produce 2.3270%
6:12 p.m. ET Thursday: Stock futures open slightly higher
Here’s where the major stock index futures opened on Thursday night:
S&P 500 Futures (EN=F): +12.5 points (+0.28%) to 4,543.25
dow futures (YM=F): +100 points (+0.29%) at 34,718.00
Nasdaq futures (NQ = F): +51.75 points (+0.35%) at 14,920.50
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.