Okay so we have gotten more clarity as to the state of our economy. After falling more than 2% yesterday, the Dow (chart) and the markets for that matter continued to mover lower today, albeit a bit more modestly. The Nasdaq (chart) actually managed to eke out a slight gain on the day. So what happened? Fears of a global recovery that’s losing steam is at the forefront of the volatility in the markets and data points are now confirming such a slowdown. Yesterday the payroll processor ADP came out with a report which indicated that private sector job growth was anemic in May with employers adding only 38,000 jobs. That was far less than the 175,000 jobs that economists were projecting and no where near what it is going to take to get the unemployment rate down. Couple that with the manufacturing sector slowing down dramatically as indicated by the ISM reporting that the Purchasing Managers Index posted its biggest drop in over 25 years. No wonder the markets got spooked.
The focus of attention is now on tomorrow’s May jobs report which the markets are bracing for “worse than expected” data on the health of employment sector. So what about stocks in the near term? In this type of environment sometimes it’s best to do nothing and let the markets digest all of the data points that are being released. We will take a look at the technicals over the weekend and see if there is anything glaring from a technical standpoint.
Have a good evening.