Trader Talk

US payroll data loom as fears about a slowdown grow

A trader works on the floor of the New York Stock Exchange.
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A lot of strategists seem a bit nervous that more economic data will come in lower than expected. Thus far, their fears seem well-founded.

This morning saw a flurry of disappointing data: consumer confidence for September came in at 86, well below expectations of 92.6. Separately, September Chicago PMI, a measure of manufacturing activity in the Chicago area, also came in below expectations, at 60.5 (estimates of 61.9).

Stocks started up, but drifted lower almost immediately, and lost ground again as the disappointing economic news hit the market. There was a lot of talk that the S&P 500 Index had established a short-term bottom around 1965 yesterday. I noted yesterday that the market had a bid through it most of the day, so buy on the dip has not disappeared.

There's other important economic data this week: auto sales, the Institute for Supply Management (ISM), and of course nonfarm payrolls on Friday. Auto sales is out on Wednesday. August was an incredible month and anecdotal evidence is September is not as strong.

The employment report will be released on Friday, and expectations are that August's disappointing 142,000 number will be revised upward. Still, there is some worry that September's expectation of 215,000 jobs created may disappoint. Weekly jobless claims bottomed in July, and in six out of the last nine years September's figures have come in below August.

In the meantime, Europe is mostly higher, with France and Spain up fractionally. Germany started positive and has drifted into negative territory.

The dollar's strength continues, with the down again today. European inflation was lower than expected; the European Central Bank (ECB) is meeting is this Thursday, and the falling price data makes stimulus more likely.