- Appetite for risk held in check with jobs report, ECB meeting on the horizon. (10:15am ET) U.S. stocks are treading water this morning as traders remain wary of adding risk to portfolios ahead of Friday’s monthly nonfarm payrolls report, the first containing a full month’s data since President Trump was sworn into office. This comes after major indexes notched a second day of losses on Tuesday to post their first back-to-back declines since January; technology (+0.2%) was the best performer and one of only two sectors to gain ground. Overseas, trading in Asia led to mixed performance overnight with attention largely on North Korea’s missile test. The Nikkei (-0.5%) and Shanghai Composite (-0.1%) fell while the Hang Seng (+0.4%) moved higher. European equities are moving in and out of positive territory (Euro STOXX 600 +0.1%) as the banking and energy sectors are helping and hurting, respectively. The European Central Bank meeting wraps up tomorrow, though expectations are the status quo will be maintained. Elsewhere, COMEX gold ($1209/oz.) is eyeing a seventh straight decline, WTI crude oil ($52.45/barrel) is off more than 1%, and the 10-year Treasury yield is up sharply 6 basis points (0.06%) to 2.57%.
- Booming ADP employment report for February enhances case for March rate hike. However, ADP’s new methodology remains a concern. Until recently, ADP, the nation’s largest payroll processing firm, used only its proprietary database of payroll data to make its estimate of private sector employment each month. A few years ago, ADP started adding publicly available data on employment to supplement its forecast. Effective as of the October 2016 report, ADP added oil prices, initial claims, consumer sentiment, and the Conference Board Leading Economic Index (LEI), so there is very little “new information” about the labor market in the ADP report. The February 2017 report found that the private sector economy created 298,000 private sector jobs, 109,000 more than expected by the consensus of economists as polled by Bloomberg (+187,000). The January 2017 reading on ADP was revised higher to show an increase of 261,000 (originally reported as a 246,000 gain). The ADP report, once a key input for making forecasts of the U.S. Bureau of Labor Statistics’ jobs report, has faded recently as a forecasting tool, as it no longer relies on only its own, proprietary information. The U.S. Department of Labor will release the Employment Situation report on Friday, March 10. The consensus expectation is a job gain of 195,000 and an unemployment rate of 4.7%.
- Over the last month, the LPL Financial Current Conditions Index (CCI) rose 11 points to 255. The CCI is now near the top of the range it has held since 2010. Accelerating retail sales and a decline in jobless claims were the largest positive contributors to the CCI this month, while an increase in the VIX (a measure of stock market volatility) and weaker business lending were the main detractors.
- Make that 100. The S&P 500 might have closed lower for the second consecutive day yesterday, but it has now gone 100 days in a row without a one percent close lower. That is the longest such streak since 105 in late 1995 (interestingly, that year had two streaks of more than 100 days). Taking another look at the back-to-back losses, the S&P 500 had gone 25 trading sessions without two red days in a row, the longest run since 25 last summer.
- Bull birthday. Eight years ago tomorrow, the S&P 500 closed at its lowest level of the financial crisis, marking the end of the worst bear market since the Great Depression (down 57% from the highs). Going back to WWII, this is now the second-longest bull market ever at 97 months, with only the bull market during the 1990s longer. The S&P 500 is up 250.0% since the 2009 lows. This ranks as the third-best return during a bull market since WWII, with only the 1950s and 1990s bull markets up more. Today on the LPL Research blog we will take a closer look at this bull market and how it compares to other long bull markets.  Please note: The modern design of the S&P 500 stock index was first launched in 1957. Performance back to 1950 incorporates the performance of predecessor index, the S&P 90.
- Initial Claims (3/5)
- Challenger Job Cut Announcements (Feb)
- Household Net Worth and Flow of Funds (Q4)
- European Union leaders Summit in Brussels Begins
- Eurozone: European Central Bank Meeting (No Change Expected)
- Employment Report (Feb)
- European Union leaders Summit in Brussels Continues