It has been a topsy-turvy week so far for the stock market, which looked like it had a grip on things yesterday before it slipped on geopolitical and monetary policy headlines. Actually, it did more than slip. The S&P 500 had been up as much as 0.9% but it closed with a 1.2% loss.<\/p>\n\n\n\n
One reported catalyst for the stark reversal in the afternoon session was Minneapolis Fed President Kashkari (non-FOMC voter) suggesting the Fed might not cut rates at all this year if the inflation decline stalls. The more impactful catalyst — based on intermarket dynamics that saw oil prices rise, bond yields fall, the dollar increase, and the CBOE Volatility Index spike — were reports that Iran might be readying to strike Israel (or its interests) in some way in response to Israel’s attack on Iran’s interests in Damascus.<\/p>\n\n\n\n
Those concerns didn’t seem to weigh too heavily on sentiment overnight. Granted foreign markets recoiled in response to Wall Street’s showing on Thursday, but U.S. equity futures were in rebound gear ahead of the March employment report at 8:30 a.m. ET.<\/p>\n\n\n\n
They experienced some knee-jerk volatility in the wake of a report that was stronger than expected and sent Treasury yields higher, but the prevailing trade at this juncture remains consistent with a rebound gear.<\/p>\n\n\n\n
Currently, the S&P 500 futures are up 16 points and are trading 0.3% above fair value, the Nasdaq 100 futures are up 73 points and are trading 0.4% above fair value, and the Dow Jones Industrial Average futures are up 77 points and are trading 0.2% above fair value. The 2-yr note yield, at 4.66% in front of the report, is at 4.72% now, and the 10-yr note yield, at 4.32% in front of the report, is at 4.40% now.<\/p>\n\n\n\n
The headlines from that report were all good economically speaking. Nonfarm payrolls increased by 303,000, the unemployment rate dipped to 3.8%, average hourly earnings were up 0.3%, and the average workweek increased to 34.4 hours.<\/p>\n\n\n\n
The key takeaway from the report is that it continued to support a solid earnings growth outlook even if it didn’t necessarily support the outlook for the Fed to cut rates soon.<\/p>\n\n\n\n
According to the CME FedWatch Tool, there is a 56.7% probability of a 25-basis points rate cut at the June FOMC meeting versus 65.9% yesterday.<\/p>\n\n\n\n
<\/strong>Notable headlines from the March Employment Situation Report:<\/p>\n\n\n\n