Severe Volatility Rattles Wall Street

This topsy-turvy week of market activity continues flipping and flopping. Going into yesterday’s close, the Dow, Nasdaq and S&P 500 raced up nearly 4% to 4.5%… and now we’re in the process of giving a lot of this back in Thursday’s pre-market. Still grappling with coronavirus data both in the U.S. and abroad remains the primary culprit.

Currently, 159 cases of coronavirus have been detected domestically — though this figure will no doubt grow once sufficient testing is finally available — with 10 deaths reported in Washington state and one fatality in California. Worldwide, reported cases of coronavirus have grown beyond 96,000, with 3300 deaths reported thus far.

Initial Jobless Claimsin the past week were not negatively affected by either the threat of disease contagion or negative affects to domestic industries — new claims of 216K is down from expectations and the previous week’s unchanged 219K. Both these numbers are within our year-long range of 200-225K, consistent with a robust and steady U.S. labor market.

Continuing Claimsalso came in relatively undisturbed this morning, up toward 1.73 million from 1.72 million the prior week. These releases are what we may have expected a month or even a year ago, well before threat of contagion of a viral pandemic threatened the global economy the way it looks to be doing these days. Is it realistic to expect these strong, steady figures to continue in the weeks to come, or should we look for market realities to manifest in our jobs data going forward?

Tomorrow’s Employment Situation report from the U.S. Bureau of Labor Statistics (BLS) are likewise not expected to feel the pressure of coronavirus effects. Non-farm payroll estimates are for roughly 175K new jobs created in the month of February. The ADP (NASDAQ:ADP) private-sector payroll numbers from yesterday looked healthy as they had been in recent months, with the Leisure/Hospitality segment growing by 44K new jobs for the month. No one expects these numbers to remain so buoyant next month.

Productivity for Q4came in slightly beneath expectations at 1.2%, with the previous quarter’s read of 1.4% unchanged. Considering that a quarter ago we were dealing with a wholly other kind of existential crisis — the U.S./China trade war — just being over 1% looks pretty good from our current vantage point. Unit Labor Costs for Q4, on the other hand, were down a half-point from expectations and the previous quarter, to just 0.95%. Thus, while goods-producing continued relatively apace last quarter, pay for the workforce and materials slid further down.

A half hour before today’s open, the Down looks to open 670 points down from yesterday’s close, the Nasdaq down 234 points and the S&P 500 -79 points. These are improvements from levels we witnessed earlier this morning, so perhaps markets will again climb the wall of worry and bring about a steady buyback of depleted shares. But climbing high walls every day can become pretty tiresome.