The Buzz on Business for March 11th, 2024

Not too hot. Not too cold. The economic data that came out on Friday just might have been perfect. Perfect if you’re worried about an overheating economy and inflation. Perfect, if you’re worried about a weakening economy, a spike in unemployment, and a potential recession.

All of us here at the Ministry of Truth thought stocks were in for a pretty good day as soon as the labor market numbers hit the tape at 8:30 am ET, and we were right, at least at first.

But Friday was also triple witching. That’s the day that occurs once each quarter when index futures, index options, and stock options all expire. It often makes for a high-volume, roller coaster of a day as traders have to square away their books  Or pay the piper.

And that is precisely what we got on Friday.

Stock Market Report

Stocks rallied at the open on the economic news but sold off throughout the day to finish with substantial losses on solid volume. But again, we attribute most of that to triple witching.

• The Dow Jones Industrial Average was down sixty-nine points, that’s two-tenths of a percent, and it closed at 38,723.
• The S&P 500 was off seven-tenths of a percent. That’s 34 points, and it closed at 5,124.
• The NASDAQ composite got the worst of it. It was down 1.2%. Over 188 points and closed at 16,085.
• Once again, the small caps outperformed. The Russell 2000 had a loss, but a small one. It was off. Less than a tenth of a percent, less than one point, and closed basically flat at 2,085.

Bond Market Report

Bonds were mixed.

• The yield on the 2-year treasury was off three basis points, and it closed at 4.478%.
• The 20-year was up about one tick and closed at 4.353%.

Oil, Gold, and Bitcoin

• Oil was off $1.61 and closed at $77.78.
• Gold continued its winning ways. It was up $20.30. And a troy ounce will now set you back $2,186. Gold is up almost eight percent in the last seven trading days.
• Bitcoin briefly poked its head above $70,000 and closed at a new all-time high of $69,228.90, up $1625.25.

Mixed Labor Market Data

The Commerce Department released the balance of the labor market complex on Friday, and the numbers were mixed. But mixed is a good thing

First, the bad news: the unemployment rate spiked to 3.9% in February. This exceeded both expectations of 3.7% and January’s number, which was also 3.7%. That’s the headline number, and it wasn’t great, but that wasn’t all the bad news.

Year-over-year average hourly earnings also disappointed. Economists were expecting earnings to have grown at a 4.4% annual rate. And they were wrong! They came in at 4.3%.

Wages came in below expectations for February as well. The month-over-month expectation was for an increase of two-tenths of a percent. A one-tenth of one percent increase is all we got.

Still, average hourly earnings are increasing just at a slightly slower pace than expected. Had they decreased, well, that would have been a different kettle of fish.

And there was some good news. The economy created 275,000 new jobs in February, versus expectations of 198,000. And the January number of 229,000 new jobs. So both directionally and versus expectations, payrolls grew in February, and that is very good news indeed.

Inflation Data Due Out

If it feels like to you that just as we get done digesting one set of inflation numbers, we have another one on the horizon, you are right.

Tomorrow we get the CPI complex. The street expects the Consumer Price Index to have increased by 0.3% for February and at a 3.7% annual rate. Core CPI is expected to have increased 0.3% for the month and at 3.7% for the year.

While inflation is way down from where it was eighteen months ago, a 4% annual rate is well above the Fed’s target of 2% and just way too high. Further, the numbers have increased steadily for the last four months. There is still work to do on the inflation front.