US market update: indices wobble as cracks in data begin to appear

The weaker JOLTs jobs data (9.93 million vs 10.50 million) comes just a day after the ISM Manufacturing PMI decreased to 46.3 in March, its lowest level since May 2020. It was the fifth straight reading below 50, indicating that factory activity is contracting.

Further fuelling slow-down fears, Factory Orders for February fell by more than expected (-0.7% vs -0.5% exp) and a warning from JP Morgan CEO Jamie Dimon that the impact of the banking crisis would be felt for years.

“It is not clear when this current crisis will end,” Dimon said. “It has provoked lots of jitters in the market and will clearly cause some tightening of financial conditions as banks and other lenders become more conservative.”

Returning to the labour market data, the JOLTs job openings data is viewed as a reasonably reliable guide to labour market health. It is followed tonight by a second labour market indicator, the ADP Employment Report, and then the big one Non-Farm Payrolls (NFP), on Friday evening.

What is expected from the ADP Employment Report and NFP?

• The ADP employment report is released tonight, the 5th of April, at 10.15pm AEST
• The ADP report isn’t an exceptionally reliable guide to Non-Farm Payrolls but nonetheless, the market expects a 200k rise in ADP payroll employment in March from 242k in February
• Non-Farm Payrolls is scheduled for release on Friday night, the 7th of April, at 10.30pm AEST
• The market is looking for payrolls to rise by 240k in March and for the unemployment rate to remain at 3.6%
• The participation rate is expected to remain unchanged at 62.5%, and average hourly earnings are expected to rise by 0.3%, lowering the annual rate to 4.3% from 4.6%.

S&P 500 technical analysis

Overnight, the S&P 500’s recent advance stalled just below the top of its four-month 3800/4200 range. While we can’t rule out a brief false break higher, we see the 4200 area as the right area to lighten exposure looking for a retest of the bottom of the range at 3800ish in the months ahead.

Aware that should the S&P 500 see a sustained break above 4200, i.e. more than three sessions, it would suggest a stronger rally towards 4500 is underway.

S&P 500 daily chart

Nasdaq technical analysis

After a rampaging run higher during March and the first quarter of 2023, the Nasdaq posted a potential loss of momentum or “reversal candle” overnight, warning the rally is tired. Additionally, the Nasdaq is not far from the August 13,740 high, our upside target for the past 4-5 weeks.

We expect to see the Nasdaq commence a retracement lower in the coming sessions towards support at 12,800.

Nasdaq daily chart

Dow Jones technical analysis

In last week's analysis, we noted that the Dow Jones had rebounded above the support from the 200-day moving avergae (MA), a move which allowed a more constructive view to emerge.

After reaching the resistance coming from the March high at 33,383 overnight, not far from significant downtrend resistance at 34,000 (from the bull market 36,952 high), we would expect to see limited gains before a retracement back towards the 200-day MA at 32,400.

Dow Jones daily chart

1. TradingView: the figures stated are as of April 5th, 2023. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.