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If This is the Start of a Correction, It's Going to be Pretty Tame

Friday, 5 Apr 2013 | 4:16 PM ET
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If this is the start of the much-awaited correction, it's going to be pretty tame. Thoughts on today's downturn:

First, we closed near the highs for the day...the Dow was down nearly 170 points shortly after the open, but we began climbing back almost immediately. Hardly a defeated tape.

Second, volume: no panic. A lot of selling at the open, but that quickly died down and NYSE consolidated volume is below average today.

Third, the stock market: it may not be clairvoyant, but it certainly can be prescient. I have been complaining that for the past two weeks cyclical stocks (materials, industrials, financials) have notably underperformed defensive names (consumer staples, healthcare, utilities). That turned out to be a good call (by the markets, not me), given the string of weak economic data we saw this week.

Since March 21 close...

  • S&P 500 0.5%
  • Materials -1.9%
  • Energy -1.1%
  • Tech -0.9%
  • Industrials -0.8%
  • Financials -0.2%

Fourth, don't freak out too much: we had eight months of great jobs numbers and now we got a crummy number. We all know the numbers are subject to large revisions. Upward revisions in January and February in the jobs data, as well as a rise in the work week, mitigated some of the current month's lousy numbers.

Sure, if you just looked at this week's crummy March data (ISM, ISM Services, ADP, weekly jobless claims, and today's Nonfarm Payroll reports), you might conclude the economy is going downhill fast and that 2013 GDP will be 1.5 percent at best. It's possible, but it's more likely this is a bump rather than a prolonged downturn.

This happened last April, remember--a below-par jobs report on April 6th dropped the S&P 500 2.8 percent in the following two days. It turned out to be a blip.

Fifth, be a little skeptical about the simple answer for this month's lousy jobs number: the sequester killed us. Really? Haven't states been firing people left and right for the past three years? Wasn't the federal government in the midst of tightening its belt for the last several years?


By CNBC's Bob Pisani

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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