Not everyone got caught flat-footed at the anemic level of job creation in April. In fact, many investors appeared to be bracing for it.
Stock-based funds saw huge outflows in the days leading up to Friday's nonfarm payrolls report, which showed the economy added just 160,000 new positions, or 42,000 below what Wall Street economists expected. Funds lost nearly $17 billion in investor cash, according to figures released Friday by Bank of America Merrill Lynch.
The fund exodus was more evenly distributed than usual, with exchange-traded funds surrendering $4 billion, or 0.5 percent of total assets, while mutual funds lost $13 billion. BofAML strategists labeled the move "risk-off into payrolls" as investors withdrew the most cash for a week since September.
That could explain the fairly muted market reaction to the April jobs report. Major market averages actually rose slightly at the market open Friday. The weak report caused expectations for a Fed rate hike this year to diminish even further, with traders pinning the chance of even one hike this year at just 50-50. The S&P 500 had been off 0.7 percent for the week heading into the day's trading, putting it about flat for the year.