Every Friday I recap “news you can use” from the week: a handful of quotes from major (and often expensive) news sources, so you can stay up to date on the news that affects your money without spending a dime and in less than a minute.
Here’s an overview of what happened this week.
What it takes for stocks to keep the current rally intact as investors seem confident the banking stress is over (April 2, MarketWatch) The U.S. stock market has been flashing an important signal that suggests concerns about the banking sector have dissipated after the sudden collapse of Silicon Valley Bank earlier in March.
The Cboe Volatility Index, a gauge of expected volatility in the S&P 500 index, dropped below the 20 level last week for the first time since March 8, suggesting a return to a lower risk environment that prevailed before Silicon Valley Bank first announced it had to sell securities to strengthen its deteriorating financial position.
Oil Surges Most in a Year After OPEC+’s Shocking Production Cut (April 2, Bloomberg) Oil surged after OPEC+ unexpectedly announced crude output cuts that threaten to tighten the market, delivering a fresh inflationary jolt to the world economy and irking the White House.
The Organization of Petroleum Exporting Countries and allies including Russia pledged on Sunday to make cuts exceeding 1 million barrels a day from next month, with Saudi Arabia leading the way with 500,000 barrels. Traders had expected OPEC+ to hold output steady.
JPMorgan Warns Stocks Are in ‘Calm Before the Storm’ (April 3, Bloomberg) A risk-on mood fueling this year’s equities rally is likely to falter, with headwinds from bank turbulence, an oil shock and slowing growth poised to send stocks back toward their 2022 lows, according to JPMorgan strategist Marko Kolanovic.
“The Fed indicated no intention to cut interest rates this year, yet risk assets are exhibiting an unprecedented rally, with European stocks trading near all-time highs and US stocks recovering recent losses,” Kolanovic wrote in a note to clients Monday. “We expect a reversal in risk sentiment and the market retesting last year’s low over the coming months.”
Job openings tumbled below 10 million in February for the first time in nearly two years (April 4, CNBC) Job openings fell below 10 million February for the first time in nearly two years, in a sign that the Federal Reserve’s efforts to slow the labor market may be having some impact.
Available positions totaled 9.93 million, a drop of 632,000 from January’s downwardly revised number, the Labor Department reported Tuesday. It was the first time vacancies fell below 10 million since May 2021.
Private payrolls rose by 145,000 in March, well below expectations, ADP says (April 5, CNBC) Private sector hiring decelerated in March, flashing another potential sign that U.S. economic growth is heading for a sharp slowdown or recession, payroll processing firm ADP reported Wednesday.
Company payrolls rose by just 145,000 for the month, down from an upwardly revised 261,000 in February and below the Dow Jones estimate for 210,000.
ChatGPT Opens Door to Four-Day Week, Says Nobel Prize Winner (April 5, Bloomberg) Christopher Pissarides – a professor at the London School of Economics who specializes in the impact of automation on work — said the labor market can adapt quickly enough to artificial intelligence-backed chatbots. His remark tamp down concerns that rapid advances in technology could bring mass job losses.
“I’m very optimistic that we could increase productivity,” he said in an interview at a conference in Glasgow. “We could increase our well-being generally from work and we could take off more leisure. We could move to a four-day week easily.”
Commercial real-estate prices could tumble 40%, rivaling declines from the 2008 financial crisis: Morgan Stanley (April 5, 2023) Morgan Stanley analysts think commercial property prices could tumble as much as 40%, nearing declines seen in the aftermath of the 2008 global financial crisis.
The estimate comes as trillions of dollars of commercial mortgage debt is set to mature in the next few years, likely in a higher rate environment. But there is also worry of broader ripple effects from half-empty office buildings.
US Profits Set for Pandemic-Sized Drop, Goldman Strategists Say (April 6, Bloomberg) Analyst consensus expectations are for S&P 500 earnings-per-share to fall 7% in the first quarter from a year earlier, marking the sharpest decline since the third quarter of 2020 and a low point in the profit cycle, strategists including Lily Calcagnini and David Kostin wrote in a note. “If analyst projections are realized, this quarter will represent the trough in S&P 500 earnings growth.”
Job growth totals 236,000 in March, near expectations as hiring pace slows (April 7, CNBC)
The Labor Department reported Friday that payrolls grew by 236,000 for the month, compared to the Dow Jones estimate for 238,000 and below the upwardly revised 326,000 in February.
The unemployment rate ticked lower to 3.5%, against expectations that it would hold at 3.6%, with the decrease coming as labor force participation increased to its highest level since before the Covid pandemic.
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I founded Money Talks News in 1991. I’m a CPA, and I have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.