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Disappointing Jobs Data Drags Stocks Sharply Lower - U.S. Commentary

Stocks moved sharply lower at the start of trading on Monday, as traders finally had a chance to react to Friday's disappointing jobs report. The major averages showed substantial moves to the downside, pulling back further off their recent highs.

The major averages have not seen much follow-through on their initial downward moves but remain firmly negative. The Dow is down 140.39 points or 1.1 percent at 12,919.75, the Nasdaq is down 42.01 points or 1.4 percent at 3,038.49 and the S&P 500 is down 18.06 points or 1.3 percent at 1,380.02.

The initial weakness on Wall Street came as the Labor Department's monthly employment report, released while the markets were closed last Friday, showed much weaker than expected job growth in the month of March.

The report showed that non-farm payroll employment increased by 120,000 jobs in March, while economists had expected the addition of about 201,000 jobs

Despite the weaker than expected job growth, the unemployment rate unexpectedly edged down to 8.2 percent in March from 8.3 percent in February. With the unexpected drop, the unemployment rate fell to its lowest level since coming in at 7.8 percent in January of 2009.

However, James Knightley, senior economist at ING, noted that the drop in the unemployment rate was "only caused by the size of the workforce falling by less than the drop in the number of people unemployed, with household employment down 31,000."

The disappointing jobs data has led to renewed concerns about the economic outlook and inspired some traders to cash in on the strong upward move seen in recent months.

Health insurance stocks have shown a significant downward move in early trading, dragging the Morgan Stanley Healthcare Payor Index down by 6.3 percent. Molina (MOH) has helped to lead the way lower, tumbling 22.5 percent after Ohio did not select the company to administer its Medicaid program.

Considerable weakness is also visible among financial stocks, with the NYSE Arca Broker/Dealer Index and the KBW Bank Index falling by 2.3 percent and 2.2 percent, respectively.

Healthcare provider, biotechnology, natural gas, and defense stocks are also posting steep losses, moving lower along with most of the major sectors.

Meanwhile, gold stocks are bucking the downtrend by the broader markets amid a notable increase by the price of the precious metal.

In overseas trading, stock markets across the Asia-Pacific region moved lower on Monday, although several markets were closed for public holidays. Japan's Nikkei 225 Index fell by 1.5 percent, while China's Shanghai Composite Index dropped by 0.9 percent.

Meanwhile, the major European markets all remain closed on the day amid a continuation of the long holiday weekend.

In the bond market, treasuries are seeing some further upside after showing a strong upward move in Friday's abbreviated session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.5 basis points at 2.035 percent.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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