The market had a tough last half of the week, erasing most of the gains and finishing almost flat with the SPY at +0.24%. Earnings are also mostly behind us, with reports still coming out, but there is less and less possibility to move the market.
This week coming up is a week full of potentially market-moving news. There is Monday PMI data, Jobs data, and Non-Farm payrolls.
Here are 5 things to watch this week in the Market.
ISM PMI’s
Monday and Wednesday at 10 am Eastern the Manufacturing and Services PMI’s come out respectively. With such a big miss in the Chicago PMI last week, these could cause some market volatility. If either comes in at a miss we could see some similar market movement to last Friday, where there was an initial bump on the news but an eventual sell-off after the impulse move. If we come in at a beat, we could see the opposite start to trade. Seeing as these are manufacturing reports they could also have an outsized impact on manufacturing and cyclical stocks.
JOLTs Job Openings
The labor market has been a constant theme this year in both the inflation debate as well as the rate debate. On Tuesday the JOLTS Job openings are out and that is a direct report on how strong the labor market really is. If we come in lower than expected and show a loosening labor market we could see the market rally if we come in higher than expected we could see the opposite as the market realizes that on paper the US economy is still strong. Either way, this could impact the Fed Funds rate release later this month.
ADP Non-Farm Employment Change
This is the precursor to the government's data out on Friday and is a release of the change in employed people for the month. Similar to the JOLTS report, a tightening market could produce some sell-side pressure in the markets, especially with Fed Funds out late this month. The opposite could be true with a loosening market. If we miss and see that employment is starting to weaken we could see a positive response from the market.
Average Hourly Earnings
Friday average hourly earnings are released with Non-Farm payrolls and unemployment rate. This could be important to watch not for the immediate response from the market, as Non-Farms and Unemployment will most likely overshadow it, but because it could be an indicator of the health of the American consumer. If this comes in weaker than expected it could be problematic down the road as inflation appears to be rearing its head back up. However, if we see hourly earnings continue to beat out Core CPI and other Monthly inflation metrics it could be a sign that the consumer can overcome the higher prices.
Non-Farm Payrolls
The last big hitter for the week is Non-Farm Payrolls out on Friday at 8:30 am. This often has a pretty large market impact as it is a broad measure of how strong or weak the economy is. Similar to the ADP numbers released earlier in the week, these are released by the Bureau of Labor Statistics so are usually a little more heavily weighted. Also similar to the ADP report, if we see a loosening labor market we could see the market rally on the thought the Fed will need to act this year. If we see a tightening or stable market we could see the market start to sell, at least temporarily, on the fears that higher for longer will reach into next year.
Best of luck this week and don’t forget to check out my daily options article.
On the date of publication, Gavin McMaster did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.