Market Turns Attention to Jobs, Looking for Clues to Fed Policy
Stocks are under pressure this morning on news of a major shake-up in Portugal’s government, escalating turmoil in Egypt, and more softness in Chinese manufacturing data. On the homefront, encouraging jobs data is helping to lift the tide. Weekly jobless claims fell 5,000 to 343,000 and the ADP employment report showed better-than-expected 188,000 private sector payrolls added last month, versus an expected gain of 160,000.
The data comes ahead of the critical Labor Department jobs report to be released at the end of the week. Consensus estimates are for 155,000 non-farm payrolls added in June versus 175,000 in May. The unemployment rate is projected to tick down to 7.5% from 7.6%.
“One of my biggest fears is that we’re going to get a four percent print on GDP and a 300,000 non-farm payroll number, which would cause the Federal Reserve to take the punch bowl away,” says Jeff Saut, chief investment strategist at Raymond James. “But I don’t think we’re going to get that in the near-term, I think the numbers will continue to grind marginally higher.”
That being the case, Saut believes the Fed-fueled sell-off in late June and spike in volatility across equity and bond markets was an overreaction, and expects the Fed to hold steady on policy through the remainder of the year. He says it’s one of the few instances when he’s agreed with well-known bearish economic Nouriel Roubini.
You can see the full “Breakout” interview below:
Related: SPDR Gold Trust (ETF) (NYSEARCA:GLD) , SPDR S&P 500 ETF Trust (NYSEARCA:SPY), SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA)