No, that wasn't a typo. The U.S. economy added just 126,000 non-farm payrolls in the month of March, which was well short of the consensus estimate of 245,000. In addition, the past two months' figures were reduced by of 31,000 and 38,000 jobs, respectively. The unemployment rate stayed at 5.5%, as expected.
While the traditional stock markets are closed today in the U.S., we're still seeing reactions in the index futures, Treasury bonds and currency markets. In general, the action we're seeing suggests that the U.S. economy is not as strong as expected, and the prospects of an interest rate hike from the FOMC are being pushed out.
We'll have a lot of time to digest this news over the weekend, but the gut reaction is that traders are selling stocks, buying bonds (sending yields) lower and the U.S. dollar is losing ground to the euro.
Stock futures, which had been flattish ahead of the number, are now suggesting a decline of about 110 points on the Dow Jones Industrial Average, 12 points on the S&P 500 and 23 points on the Nasdaq Composite.
The yield on the benchmark 10-year Treasury note, which had been ticking lower ahead of the print, is now down 10 basis points, to 1.811%. The U.S. dollar index is down 80 basis points, including a decidedly negative move for the greenback against the euro.
I'm not decidedly a bull or bear on this market, but consider myself a realist. On that front, today's data suggests something I've felt for a while -- the U.S. economy is not that strong without the support of the Fed, which has lasted longer than anyone thought it originally would. My gut feeling after seeing this report is that we won't see an interest rate hike this year, even though my heart tells me that rates have been kept artificially low longer than they should have been.
As a result, in this data-dependent environment, the focus shifts to Wednesday, where we'll get both the FOMC minutes from the latest meeting at 2 p.m. ET and Alcoa's (AA) earnings after the closing bell.