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TRADING THE WEEK: Status Quo Holds as Jobs Report Disappoints
Traders Magazine Online News, April 10, 2017
Silence is golden.
And that’s what is expected of the U.S. equity trading markets in the coming week. The March jobs report was a dud – and trading reflected just that sentiment. The Dow Jones Industrial Average failed to break out of its current trading range and any short-term volatility that the weaker-than-expected employment report brought failed to jumpstart trading.
The marquee report last week was the March employment report which was, according to traders, a bit of a disappointment in terms of job creation (+98K v estimates of +180k) but provided some degree of market volatility prompting some activity. But any major trade was tempered by the fact that February and March saw some winter weather which economists believe skewed the data. Also, many believe that despite the actual number that nothing will stop the Federal reserve from rasing rates at least twice more this year.
“At the end of it all, the market is pretty much back where it started the day and was all week – between 20000 and 21000,” a floor trader said. “The market, in my opinion, remains cautious and mired in the current trading range.
Trading on U.S. equity exchanges rose modestly to 6.66 billion shares per day compared to the 6.21 billion shares for the week ended March 31. Just two weeks ago trading averaged 7.52 billion shares per day, according to Bats Global Markets data.
“As we head into the next week U.S equity markets find themselves little changed from last Friday and the prior week,” said Larry Peruzzi, managing director, international equities sales/trading at Mischler Financial Group. “It’s peculiar given the pace of news coming out of Washington and the Fed. What is becoming apparent is that risk appetite is souring but there is enough optimism to keep the markets in a status quo pattern.”
Peruzzi noted that the VIX index trading range has been between 10.58 and 13.22 the entire year to date. Friday’s jobs data failed to push volatility out of that range and last week’s economic numbers that showed some modest improvement in ISM Employment, ADP employment change and Durable goods orders, the market still is listless.
“Looking ahead to the Easter shortened week the economic and earnings calendar are light,” Peruzzi said. “Market highlights begin on Thursday are March PPI numbers and April’s Michigan sentiment readings, as well as 1Q earnings season begins the following week. Just a handful of earnings are due for Thursday which include PNC financial, JP Morgan, Wells Fargo and Citigroup.”
This week will see Federal Reserve Chair Janet Yellen speaking at the University of Michigan’s Ford School of Public Policy - and the subsequent question-and-answer session that follows could give Fed watchers something to trade on. With the exception of the constant flow of news out of Washington, the markets will be digging for news and direction, Peruzzi added.
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