Stocks opened lower today before rallying for a small gain by the close. The Dow traded flat while the S&P and Nasdaq Composite both climbed higher despite poor jobs data.
No, that’s not a typo; the market was subjected to even more dismal employment data following an already rough week. Both the February Job Openings and Labor Turnover Survey (JOLTS) and ADP’s private payrolls report revealed major “misses” over the last two days. This morning, investors endured yet another labor market setback as weekly jobless claims erupted higher while the Challenger, Gray, & Christmas report showed a massive 89,703 job cuts in March.
Job cuts climbed 319.4% year-over-year (YoY) last month according to Challenger’s findings.
“We know companies are approaching 2023 with caution, though the economy is still creating jobs,” wrote Andrew Challenger, the firm’s senior vice president.
“With rate hikes continuing and companies’ reigning in costs, the large-scale layoffs we are seeing will likely continue.”
Tech layoffs, in particular, are approaching a 2001-like pace.
Worse yet was today’s revisions to initial jobless claims by the Bureau of Labor Statistics (BLS), which adjusted first-time unemployment fillings on the year significantly higher. Initial claims for the week ending March 24th were lifted from 198,000 to 246,000. The week before that (ending March 17th) saw claims rise from 191,000 to 247,000. And the week ending March 10th’s claims were revised from 192,000 to 230,000.
That’s a net increase of 142,000 initial jobless claims over the course of just three weeks. Last week’s initial claims clocked in at 218,000, beating estimates.
But it doesn’t stop there. In fact, every week this year had its initial claims adjusted higher. First-time unemployment filings totaled over 200,000 for nine straight weeks due to the adjustments.
Tomorrow, the March jobs report will be released at 8:30 am EST even though the market is closed for Good Friday. Today’s revelation from the BLS could indicate that we’re about to see an abysmal jobs number tomorrow.
“The Fed built a wall with interest rates and now the economy is running into it,” remarked Harris Financial Group managing partner Jamie Cox.
In an attempt to make everyone happy, the Fed has instead managed to anger doves and hawks alike. Some critics (like myself) argued that the Fed didn’t act fast enough. Others said that rate hikes were going to unnecessarily damage the economy, as an impending recession would slow inflation all on its own.
Now, the Fed faces still far too high inflation alongside what’s looking like a shockingly abrupt slowdown based on the last week’s worth of jobs data.
To our readers, this sudden labor weakness shouldn’t come as much of a surprise, though. We’ve been talking about the mostly “fake” jobs reports month after month.
But with the rest of the market starting to get the picture, stocks could soon feel the heat. Bulls want rate cuts and a “soft landing.” The initial claims revisions are more indicative of a sudden nosedive into a recession.
That could result in fireworks come Monday when markets open again for the first time following the March jobs report, which is offering traders yet another “make or break” moment.
