Volatility reemerges midweek. Selling pressure picked up mildly following the Federal Reserve’s (Fed) statement on Wednesday. That day, 54% of the components in the S&P 500 Index closed at an intraday low. While the benchmark index is only about 1% off its closing highs, a further pullback is certainly possible. U.S. stocks have experienced a 14% correction per year on average, and the S&P 500 has averaged an 8.9% slide in years when it has gained at least 10% in the first quarter. On a technical basis, we would look for the 2815 level to offer potential support on any such pullback, as well as the 200-day moving average (near 2774).
Job market looks healthy. The April jobs report, released May 3, showed U.S. hiring hasn’t wavered amid global uncertainty and trade tensions. Nonfarm payrolls rose 263K, higher than estimates for 190K. Average hourly earnings grew 3.2% year over year, around the fastest pace of the cycle, and at a level that should continue to bolster consumer confidence and support consumer spending. The unemployment rate fell to 3.6%, a cycle low.
The power of productivity. Productivity in the first quarter rose at the fastest year-over-year pace since 2010, thanks to last year’s surge in business spending and solid wage growth. Continued labor-market strength could kick the economic expansion into another gear, as we’ll explain later today on the LPL Research blog.
- Unemployment Rate (Apr)
- Markit US Services PMI (Apr)
- Markit US Composite PMI (Apr)
- ISM Non-Manufacturing Index (Apr)
- Eurozone PPI Report (Mar)
- Eurozone CPI Report (Preliminary, Apr)
- Nonfarm Payrolls Report (Apr.)
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