U.S. stocks were on track to decline for the first time in five sessions, giving back some of the gains from earlier in the week despite a strong January jobs report.
12:30 p.m. How likely is Medicare-for-all, wealth tax?
...According to JPMorgan Chase, about 5%. With a growing number of markets participants starting to sweat over the potential for Bernie Sanders (or even Mass. Senator Elizabeth Warren) winning the Democratic nomination, JPM economist Jesse Edgerton says not to worry:
“...we still put a very low probability on Senator Sanders’s or Warren’s most dramatic policy proposals being enacted any time soon, for several reasons. First, the Democratic nomination process is far from over. Joe Biden still leads in the most recent nationwide polls, Pete Buttigieg won the most “delegate equivalents” in Iowa, and Michael Bloomberg has been rising in both polls and markets.
Second, it looks close to a coin flip at this point whether President Trump will ultimately defeat the Democratic nominee, as prediction markets put his reelection chances a bit above 50%. And finally, even if Senator Sanders were to become president, there would still be many checks and balances on his ability to act.
Most notably, passing even remotely controversial fiscal policies would almost certainly require Democratic control of both the House and the Senate. We think the probability of Sanders or Warren becoming president and the Democrats controlling both the House and Senate is less than 10%. And even in this case, opportunities to make policy would be limited by both the filibuster rules and the power of moderate Democrats.”
The bank’s logic, which echoes much of Wall Street’s conventional wisdom, is that major policy changes have to pass muster in both chambers of Congress. “Thus, both the House and the Senate would almost certainly need to be controlled by Democrats for policies like these to have any chance at all,” Edgerton wrote.
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10:25 a.m. ET: What economists are saying about the January jobs report
Most economists viewed favorably the better than expected January jobs report, pointing to the print as another point adding to a constellation of positive indicators about the U.S. labor market.
Here’s what a number of economists had to say about the report, based on statements emailed to Yahoo Finance:
Rubeela Farooqi, chief U.S. economist for High Frequency Economics: “Overall, a strong gain in payrolls to start the year. The 3-month average stands at a solid 211K. The unemployment rate remains historically low and though the pace of wage gains had moderated, the latest reading is encouraging. These data remain supportive of an ‘on hold’ Fed stance, as the Fed assesses the impact of prior rate cuts on the economy.”
Charlie Ripley, Senior Investment Strategist for Allianz Investment Management: “The real question for most market participants is whether the endurance of job additions will continue to persist throughout the remainder of the year. Last year’s average payroll additions were 175k per month and today’s data reiterates the need for labor as the current economic expansion continues. Wage increases were stronger than December’s data with a 0.2% monthly gain and we suspect this will be a continuing theme throughout the year as employers attempt to attract workers within tight labor market conditions. Overall, the January employment report provided a clear indication we haven’t reached the end of the current economic cycle.”
Ian Shepherdson, Pantheon Macroeconomics chief economist: “Looking ahead, surveys continue to point to substantially slower payroll growth, but the hard data have outperformed substantially in recent months and show no signs yet of fading. Even so, January’s jump in payrolls likely will be followed by a significantly smaller increase in February, as favorable weather effects fade and healthcare job growth mean-reverts.”
Nick Bunker, Indeed economic research director: “Overall, this was a strong report. Even the seemingly negative trends are actually positive. The slight increase in the unemployment rate might seem concerning, but it is actually due to a pick up in workers reentering the labor market. The labor force participation rate for people in their prime working years increased in January, but remains below previous highs. All signs point to a further pick up in this rate if the labor market continues to grow.”
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9:37 a.m. ET: Stocks open lower even after strong jobs report
The three major domestic stock indices opened lower Friday morning, with the Dow off more than 100 points.
Declines in the Dow were led by shares of Dow Inc. and Goldman Sachs around market open. The Materials and Energy sectors led declines in the S&P 500, as U.S. crude oil prices declined more than 1%.
Here were the main moves in markets, as of 9:37 a.m. ET:
S&P 500 (^GSPC): -0.58% or -19.34 points to 3,326.44
Dow (^DJI): -0.62% or -182.54 points to 29,197.23
Nasdaq (^IXIC): -0.61% or -58.11 points to 9,513.92
Crude oil (CL=F): -1.2% or -0.61 to 50.34 a barrel
Gold (GC=F) +0.25% or +3.90 to 1,573.90 per ounce
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9:20 a.m. ET: How Credit Suisse’s chief met his downfall
Credit Suisse’s (CS) stock is down modestly ahead of the opening bell. Early Friday, the storied Swiss bank accepted the resignation of CEO Tidjane Thiam, capping a spectacular spying scandal that rocked the industry’s usually sleepy world.
Yahoo Finance’s Oscar Williams-Grut breaks down how the lurid scandal — which includes cocktail party bust-ups, car chases, and clandestine operations at the bank — began last year, and culminated in a public power struggle that Thiam ultimately lost.
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8:30 a.m. ET: Economy created 225,000 jobs in January
The U.S. labor market went from strength-to-strength in January, beginning 2020 by adding 225,000 jobs — but the unemployment rate ticked up to 3.6% (still a 50-year low) as more workers entered the labor pool, which drove up the participation rate to 63.4%. The blowout number was far above Wall Street’s consensus, and was presaged by Wednesday’s ADP private payrolls report.
Stock futures remain in the red, but pare some losses on the news, as coronavirus fears continue to weigh.
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7:33 a.m. ET: Stock futures fall ahead of January jobs report
Contracts on the three major indices were lower before the Department of Labor’s January jobs report, set for release at 8:30 a.m. ET. Heading into Friday’s session, the S&P 500 was up 3.7% since the end of last week through Thursday’s close.
The “official”jobs report is expected to show payroll gains totaled 165,000 in January, representing an increase after December’s 145,000 additions. The unemployment rate likely held at a 50-year low of 3.5%. Average hourly wage gains, which disappointed in the December jobs report, are expected to have accelerated slightly to a 3.0% increase year on year.
Meanwhile, investors continued to monitor the spread of the coronavirus. The death toll from the outbreak has so far totaled 636 in mainland China, among more than 31,000 confirmed cases. Carmakers including Toyota have extended shutdowns at their manufacturing centers in China to try and contain the spread of the disease.
Here were the main moves during the pre-market session, as of 7:33 a.m. ET:
S&P futures (ES=F): 3,335.5, down 9.75 points or 0.29%
Dow futures (YM=F): 29,227.00, down 101 points or 0.34%
Nasdaq futures (NQ=F): 9,425.50, down 30 points or 0.32%
Crude oil (CL=F): $50.58 per barrel, down $0.37 or 0.73%
Gold (GC=F): $1,570.10 per ounce, up $0.10 or 0.01%
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