Stocks are indicated to start today’s session in positive territory, with continued Fed-inspired optimism helping sentiment at the open. The positive labor market reading is helping matters as well, as it indicates a best of both worlds for market participants.
This morning’s jobs report from payroll processor ADP (ADP – Analyst Report) matched expectations. This report, which serves as a preview for the all-important monthly non-farm payroll report from the U.S. government’s Bureau of Labor Statistics, showed gains of 200K in March and the prior-month’s 205K (revised lower by 9K). Estimates for the Friday BLS report, which currently stand at 210K per Bloomberg.com for the ‘headline’ and 200K for the ADP-comparable private-sector jobs, aren’t expected to change ahead of that release. The BLS report showed 242K in February, with the unemployment rate remaining unchanged at 4.9%.
This is a favorable backdrop for stocks, particularly following Fed Chairwoman Janet Yellen’s super-dovish comments on Tuesday that market participants interpreted to mean no imminent rate hikes in the near term. The Fed is responding to a combination of soft domestic economic readings and weakness abroad.
Estimates of Q1 GDP growth have been coming down lately, with this week’s February consumer spending data pushing the growth pace below the +1% level. This lack of GDP momentum appears to be at odds with what we have been seeing in the labor market, which shows steady progress towards full employment.
Given this, Yellen’s dovish comments from Tuesday can only mean super cautiousness on the part of the central bank. Market participants are loving it.
