Strong Jobs Report Overshadowed – Monday Morning Market Memo – March 7, 2022

Strong Jobs Report Overshadowed – Monday Morning Market Memo – March 7, 2022

The monthly jobs report released by the U.S. Department of Labor is one of the more important economic numbers to the financial markets.  Last Friday’s February Jobs Report showed the economy added 678,000 jobs last month and the unemployment rate fell to 3.8%.  This was much better-than-expected, as estimates were for job gains of around 400,000.  Further, numbers for the prior two months were revised higher.  So overall, we’re looking at a strong jobs picture, with employment levels closer to pre-pandemic levels.  Unfortunately, this news was overshadowed by the situation in Ukraine.

Adding to worries over the Russian invasion of Ukraine and economic sanctions, news of a nuclear power plant catching fire after being shelled by Russian troops raised concerns to a whole new level and weighed on market sentiment across the globe.  Friday’s market decline added to weekly losses – with the Dow Jones Industrial Average sliding 1.3% (its fourth straight weekly decline), the NASDAQ Composite shedding 2.8%, and the Standard & Poor’s 500 Index losing 1.3%.

Market participants rotated into so called “safe-haven” assets such as gold and the dollar – with the 10-year Treasury note also gaining as investors were clearly in a “risk-off” mood.  As to the current stock market outlook – Bulls (who believe the market will rise) point out history shows investors have been rewarded by staying invested or buying during periods of conflict and turmoil – while Bears (who believe the market will decline) counter each situation is different, and the path of future events is unknown.  Overall, with this level of geopolitical uncertainty, we expect market volatility to continue, especially as oil and other commodities react to supply concerns, but we remain long term investors.

Looking more closely ahead – something the market is (almost) certain about is that the Federal Reserve will be raising rates by ¼ point at this month’s policy meeting.  According to the CME FedWatch Tool, there’s currently a 95.9% chance the Fed will raise interest rates ¼ point this month.  Before that, February inflation data is released this week (with expectations for the Consumer Price Index to increase 7.8% year-over-year), and we’ll also get another handful of earnings reports to digest.  Companies scheduled to report this week include DICK’S Sporting GoodsPetco Health and WellnessCampbell SoupOracleDocuSignCrowdStrike Holdings, and Ulta Beauty.

All the best – Southport Station Financial Management, LLC