Pre-market futures are off their early morning lows but still deep in the red at this hour: the Dow is -466 points, -0.95%, the S&P 500 -59, -0.86%, the Nasdaq -272 points, -1.09% and the small-cap Russell 2000 -27, -1.06%. Indexes are now down anywhere from -2% (Dow) to -4.4% (Nasdaq) over the past month of trading. Year to date, the Dow holds onto slight gains and the Russell 2000 is still +4%, but otherwise the markets are selling off.
It had ought to be no mystery why market sentiment has turned south: The U.S. and Israel bombing Iran over the weekend disrupts much of what had been assumed about the global economy — not the least of which are spot oil prices, where Iran cutting off the Strait of Hormuz stops the flow of 20 million barrels of oil (bbl) per day. As a result, West Texas Intermediate (WTI) oil has shot up +8% to $72/bbl, while Brent crude hit $82/bbl before cooling somewhat since, so far in early trading hours.
Beyond this, there is little clarity anywhere on what happens next in this conflict — further anathema for the stock market: uncertainty. Needless to say, news on the progress (or lack thereof) in this war with take precedence over mere economic reports coming out this week — Jobs Week, for those still paying attention — and even the existential “AI crisis.” War in the Middle East has already cost the U.S. blood and treasure.
What to Expect from the Stock Market
Aside from whatever emerges from this major global conflict, we do have economic prints worth keeping an eye on. After today’s open, final S&P Manufacturing PMI for February looks to improve on its 51.2 posted last time around — thankfully above the 50 threshold between growth and loss. ISM Manufacturing, also for February, is expected to reach 52.0% from 52.6% previously.
Q4 earnings season winds down this week, although we do see a couple important companies reporting Tuesday: Target TGT ahead of the opening bell and cybersecurity staple CrowdStrike CRWD after the close. We await Zacks Director of Research Sheraz Mian’s Wednesday update on the state of Q4 earnings season at this advanced stage; as you can see by last week’s Earnings Trends report https://www.zacks.com/commentary/2875426/retail-sector-earnings-in-focus, Sheraz has a way of condensing deep and complicated matters into easy-to-understand explanations.
How Will Jobs Week Fare?
We don’t see new JOLTS numbers like in a “normal” Jobs Week, but Wednesday’s private-sector payrolls from Automatic Data Processing ADP and Friday’s non-farm payrolls from the U.S. Bureau of Labor Statistics (BLS) are on the schedule. For ADP, 50K new private-sector jobs are expected to have been filled last month, and BLS looks for 54K. These come from the widely varied +22K on ADP and +130K on BLS the previous month.
Further, analysts look for a falling Unemployment Rate, from 4.4% to 4.3% month over month, with Wages coming down to +0.3% from +0.4% in the prior BLS report. Should these estimates prove accurate, this would belie the anecdotal evidence of mass layoffs at tech corporations and struggles in the general labor market presently. Initial Jobless Claims, out Thursday morning, are expected to remain cool at 215K — in-line with an historically healthy range we’ve seen since prior to holiday season last year.
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Automatic Data Processing, Inc. (ADP): Free Stock Analysis Report Target Corporation (TGT): Free Stock Analysis Report CrowdStrike (CRWD): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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