Tuesday: ISM Manufacturing PMI (49.6 est.)
The forecast is for a contraction in the manufacturing sector in March. January and February results were above 50 (expansion) after almost three straight years of monthly contractions.
I’ll be watching the new orders index to see how companies are responding to the tariff threats. And the prices paid index since the last 2 months have experienced a big spike in inflation.
Wednesday: ADP private sector payrolls (+118K jobs expected)
Thursday: ISM Services PMI (53.0 est.) and Trade balance
More critical data on how the services sector (roughly 2/3rd’s on US economy) is performing. Like Manufacturing PMI’s, I’m interested to see how new orders and prices paid subindexes look. Services inflation is still way higher than it should be.
Friday: NFP employment report (+139K est.)
Jobs and wages need to hold steady. Consumers are clearly worried about their jobs more than any other time in the post-GFC period. They are already pulling back on spending even though actual job loses aren’t yet showing up in the aggregate data.
Earnings: 5 S&P 500 companies report earnings this week but no notable names. Q1 won’t really get underway until the following week.
Technicals: It was a weak bounce off support last week, with the S&P 500 not even making it back to the midpoint of the sell-off (or 50-day moving average) before rolling back over on Friday.
We hit the upper end of the resistance zone I mentioned in last week’s post. (blue dotted line on chart)
Looks like a retest of the recent lows is in play this week. I’m not optimistic that it will hold. But we’ll see.
Next downside targets are 5400 and then around 5150. There are a bunch of confluences around 5150, I’ll elaborate should we get there.
Bottom line: These near-term hurdles are for real, barring a pivot from the Fed or the administration. Even without a recession, we could still get a valuation reset as we did in 2015, 2018, and 2022.
It’s important that you are well diversified to weather the storm. Make sure you know what you own and why you own it.