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Stock Market Outlook for April 3, 2020


There has only been one other March in the past five decades that payrolls have declined: we may be in store for another.

 

Real Time Economic Calendar provided by Investing.com.

 

 

*** Stocks highlighted are for information purposes only and should not be considered as advice to purchase or to sell mentioned securities.   As always, the use of technical and fundamental analysis is encouraged in order to fine tune entry and exit points to average seasonal trends.

Stocks Entering Period of Seasonal Strength Today:

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AmerisourceBergen Corp. (NYSE:ABC) Seasonal Chart

Alaska Communications Systems Group, Inc. (NASD:ALSK) Seasonal Chart

Craft Brewers Alliance Inc. (NASD:BREW) Seasonal Chart

Invesco S&P 500 BuyWrite ETF (NYSE:PBP) Seasonal Chart

Vanguard Long-Term Corporate Bond ETF (NASD:VCLT) Seasonal Chart

Spark Therapeutics Inc. (NASD:ONCE) Seasonal Chart

 

 

The Markets

Stocks managed to rebound on Thursday as the price of oil stabilized following headlines that a coordinated global production cut may be in the works.  The S&P 500 Index jumped by 2.28%, moving back towards its 20-day moving average, a typical occurrence going into an uncertain event.  On Friday, the first payroll report that accounts for the economic disruption resulting from the coronavirus will be released.  The consensus analyst estimate pegs the decline in payrolls for March at 150,000, although the range of estimates suggests the result is anybody’s guess.  The most pessimistic estimate pegs the decline at 1.25 million, while the most optimistic analyst expects an increase of 100,000 payrolls.  As with everything else, the wide range of estimates is certainly unprecedented.  On average, payrolls typically expand by 0.6% in the third month of the year, benefitting from the ramp in hiring leading into the spring as summer employment lifts the tally.  There has only been one other March in the past five decades when payrolls declined.  In March of 2009, the total number of payrolls declined by a non-seasonally adjusted 133,000, or 0.1% (the decline on a seasonally adjusted basis was 800,000).  Even in a recession, seasonally recurring fundamental tendencies are still occurring, albeit at a slower pace.  We’ve never seen a complete dislocation from seasonal norms, so the range of estimates is, perhaps, fair.  We’ll strip out the seasonal manipulation (which are irrelevant in this environment) and break down what is actually happening in the labor market in our report that we’ll release to subscribers intraday on Friday.  Signup now to be included on our distribution list.

Friday’s employment report will be the second piece of significant hard data that portrays the toll that the coronavirus has had on the economy over the past month.  The first is March’s report on vehicle sales, which is very telling of what to expect when retail sales are released in the weeks ahead.  We sent out a complete breakdown and analysis of the results in a report released to subscribers intraday.  Don’t miss out on this important report highlighting the impact of the shuttering of the US economy on spending, both from businesses and the consumer.  Signup now and we’ll send it to you.

Also released on Thursday was the latest tally of natural gas inventories in the US.  The Energy Information Administration (EIA) reported that natural gas stockpiles shrank by 19 billon cubic feet (bcf) last week, continuing the withdrawal season that typically peaks at the end of March.  The year-to-date change in stockpiles is a decline of 37.8%, which is less than the average decline nearing the end of withdrawal season of 50.8%.  A warmer than average winter and production that remains plentiful has elevated stockpiles above the 5-year average for this time of year, failing to create a bullish backdrop for prices that is typical heading into the spring.  The Natural Gas ETF (UNG) declined by 2.16% following the result, continuing a trend of lower-lows and lower-highs.

Sentiment on Thursday, as gauged by the put-call ratio, ended bearish at 1.21.

 

 

 

Seasonal charts of companies reporting earnings today:

 

 

S&P 500 Index

 

 

TSE Composite

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