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Stock indexes are coming off another positive week that also saw the S&P 500 notch its 22nd record closing high of 2024, The index gained more than +10% during the first quarter, the best start to a year since 2019. The Nasdaq ended the quarter up over +9% while the Dow gained +5.5% in the first three months of the year.
The first week of trading for Q2 pulls investors’ attentions back toward the labor market with data including the Job Openings and Labor Turnover Survey (JOLTS) on Tuesday, ADP’s private payroll report on Wednesday, as well as the highly anticipated March Employment Report due out on Friday.
The official March jobs report is of particular interest as the first two months of payroll data this year indicated signs of the labor market gaining steam again with both months registering over +225,000 jobs added and average hourly earnings still climbing more than +4% annually.
For what it’s worth, Wall Street insiders believe job gains need to be around +125,000 and wages can probably only grow by around +3% to +3.5% to be consistent with the Federal Reserve’s +2% inflation goal.
Wage gains in February did slow substantially from January but there are some disagreements as to how accurate January data may have been. That means there is a lot riding on Friday's employment report as investors try to sort out what the true trend might be.
Bulls are hoping to see wage gains pull back some more, something that many believe will increase the likelihood of Fed rate cuts starting sooner rather than later.
Wall Street mostly expects the Fed to start lowering its benchmark rate at the June 11-12 policy meeting and still anticipate three 25 basis point cuts in total this year.
Investors this week will also be scrutinizing the JOLTS report after the January report showed the “quits rate” fell to the lowest level in 3 1/2 years, signaling that more workers are staying put as the job market continues to slowly cool down.
Investors today are interested in the ISM Manufacturing Index where signs of renewed inflation have been showing up in the “prices paid” component the past couple of months. Construction Spending is also due out today.
On the earnings front, there is nothing of note on the calendar today. Keep in mind, Q1 2024 earnings season “unofficially” kicks off next Friday with results from big Wall Street banks Citigroup, JP Morgan, and Wells Fargo. I
Upper and Middle-Class Wealth Continues to Rise: Since 2020, the wealth of the top 1% has increased by nearly $15 trillion, or 49%. Middle-class Americans have also seen a rising wealth tide, with the middle 50% to 90% of Americans seeing their wealth increase 50%. Most all of the gains came from their stock holdings. The value of corporate equities and mutual fund shares held by the top 1% surged to $19.7 trillion from $17.65 trillion the previous quarter. While their real estate values went up slightly, the value of their privately held businesses declined. According to the Fed report, the top 10% of Americans own 87% of individually held stocks and mutual funds. The top 1% own half of all individually held stocks. The top 1% accounted for 30% of the nation’s wealth at the end of the fourth quarter, while the top 10% accounted for 67% of all wealth. Source CNBC
$20 Minimum Wage for Fast Food Workers in California: Most fast-food workers in California will be paid at least $20 an hour beginning Monday when a new law is scheduled to kick in, giving more financial security to a historically low-paying profession while threatening to raise prices in a state already known for its high cost of living. Alex Johnson owns 10 Auntie Anne’s Pretzels and Cinnabon restaurants in the San Francisco Bay Area. He said sales have slowed in 2024, prompting him to lay off his office staff and rely on his parents to help with payroll and human resources. Increasing his employees’ wages will cost Johnson about $470,000 each year. He will have to raise prices anywhere from 5% to 15% at his stores and is no longer hiring or seeking to open new locations in California, he said. Source NBC News
Magnificent 7 are No Longer the Only Stocks Driving S&P 500: More individual stocks pitched in to help drive the S&P 500 index to record highs during the first quarter, rebutting skeptics’ concerns that the market’s gains were too narrow to endure. Data provided to MarketWatch by Carson Group’s Ryan Detrick showed the number of S&P 500 stocks trading at 52-week highs recently peaked at 118, the highest in three years, and a clear sign that market breadth has continued to improve. Also, more index members are entering long-term uptrends, as the percentage trading north of their 200-day moving average topped 83% on Thursday, the highest since August 2021, according to Dow Jones Market Data. Just because more stocks are contributing to the rally doesn’t mean investors are giving up on Big Tech though. Data show megacap technology stocks have continued to contribute mightily to the index’s advance this year, even if their influence has waned since 2023. Taken together, the Magnificent Seven were responsible for 37% of the S&P 500’s +10.2% first-quarter gain, according to data from Howard Silverblatt, senior index analyst at S&P Global Indices. That is less than in 2023, when the seven stocks drove roughly two-thirds of the index’s advance, according to Dow Jones Market Data. But if one strips out shares of Apple Inc., Tesla Inc. and Alphabet Inc., the contribution of the remaining four members of the group swells to 47%, according to data from Silverblatt. The longtime analyst dubbed these “the Gang of Four” — Nvidia, Microsoft, Facebook-parent Meta Platforms, and Amazon. Apple and Tesla have each declined by double digits since the start of the year. While Big Tech is slowing, cyclical sectors like industrials, financials and energy stocks are picking up the slack. These three sectors, along with information technology and communications services, outperformed the S&P 500 during the first quarter. That’s up from just three sectors outperforming the index in 2023. Source MarketWatch
US Oil Suppliers Muscling Into OPEC+ Markets All Over the World: US oil exports have set five new monthly records since Western nations began imposing sanctions on Russia in 2022. And with trade restrictions on Venezuela set to renew in April, American barrels are beginning to displace sanctioned crude in India, one of the biggest buyers of illicit oil. While US oil has long been the world’s go-to flex barrel, the disruption of energy flows after Russia’s invasion of Ukraine created new pull for American barrels. Shipments to Europe and Asia surged in the aftermath, transforming the US into one of the world’s largest exporters. Record production from the US — coming just as OPEC and its allies curb their own supply — has also helped American producers gain a bigger foothold in overseas markets. Physical oil prices are reflecting that, with WTI in Houston trading near the highest levels since October and sour benchmark Mars not far behind. India — the third-largest crude importer and Moscow’s second largest buyer after China — is the latest market seeing an influx of US oil. American shipments to India are set to jump in March to the highest in nearly a year, according to data from crude tracking firm Kpler. At the same time, Russian oil imports have fallen by about 800,000 barrels a day since last year’s high point, Bloomberg tanker tracking shows. Russian shipments may decline further with Indian oil refiners no longer accepting cargoes from tankers owned by state-run Sovcomflot PJSC, which was recently sanctioned by the US. Source Bloomberg
Baltimore Disaster May be Largest-Ever Marine Insurance Payout: The collapse of a major Baltimore bridge and its knock-on effects could result in the biggest-ever marine insurance payout, the chair of insurance giant Lloyd’s of London said on Thursday. Analysts have forecast that insured losses from the disaster would amount to a figure in the single-digit billions, after a huge cargo ship crashed into the Francis Scott Key Bridge on Tuesday. Six people were presumed dead. “We’re beginning to deploy resources in anticipation of this being a very substantial claim for the industry. And for the Lloyd’s market, it’s going to take some time for for the complexity of the situation to unravel,” Bruce Carnegie-Brown told CNBC. Carnegie-Brown added that, while there would clearly be claims for the ship, cargo and the bridge, it is “second-order impacts” that would become “substantial.” “A lot of business is going to be interrupted, supply chains are going to be interrupted by ships that are both trapped inside the port and of course, ships that were trying to gain access to the port that no longer can, and those second order effects will take some time to work through,” he said. Source CNBC
Army Vet Who Changed Name to “Literally Anyone Else” Running for US President: A Texas man is hoping a legal name change and a long-shot presidential bid will get his argument across that some voters want “literally anybody else” but former President Trump or President Biden to serve another White House term. A teacher and Army veteran in North Richland Hills, Texas — formerly named Dustin Ebey — told The Hill he legally changed his name to “Literally Anybody Else” and is running for president under that name. He said he is hoping the name will send a message. “I don’t care as much about winning the Oval Office, but it is important that the message gets through to…the powers that be, who decide who ends up on the ballot,” he told The Hill Wednesday. “Ultimately, that’s what I’m fighting against. ‘Literally anybody else’ should not be as popular as it is.” Source The Hill
Where US Bridges are Most in Need of Repair: While the bridge collapse in Baltimore was due to a series of unlikely accidents rather than crumbling infrastructure, the incident has put renewed focus on the vulnerability of bridges across the U.S. The Department of Transportation considers 6.8% of the over 600,000 bridges it tracks and rates to be in "poor" condition. That doesn't sound too bad on a percentage basis, but it's over 40,000 bridges in total. West Virginia, Iowa, South Dakota and Rhode Island fare the worst, with 15% to 20% of the bridges in each state rated "poor." Georgia has the highest percentage of bridges in "good" condition (75%), while in Arizona, Nevada and Texas just 1% of bridges are rated "poor." The trend nationwide is actually quite positive over the past two decades, according to the Department of Transportation data. The percentage of bridges in poor condition has been halved from 15.2% in 2000 to 6.8% now. Source Axios
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