Expectations for a more aggressive series of Federal Reserve rate increases are building, and the March employment report could give investors more insight into the path policymakers might pursue.
The jobs report last month presented an employment picture that remained strong despite the omicron variant with 678,000 jobs added in February and the unemployment rate falling to 3.8 percent. Chief economist at the time, Preston Caldwell, noted that, despite robust job gains in recent months, the labor market has room to run further.
“The labour recovery is nowhere near complete,” he said.
Another sign of the job market’s strength emerged this past week, as unemployment claims for the week ended March 19 dropped to 187,000, the lowest level since 1969.
Payrolls will have increased by a projected 475,000 in March, according to FactSet, in another strong reading on employment.
Before the official report on March due in early April, investors will have more detail on the health of the jobs market with the Bureau of Labor Statistics’ (BLS) JOLTS report on job openings due Tuesday and the closely-watched ADP (NASDAQ:) National Employment Report out Wednesday.
The new job data arrives amid a backdrop of markets pricing in a more aggressive pace of Fed rate hikes than expected just two weeks ago. Expectations for a more aggressive armament in tightening money policy come on the heels of hawkish comments from Fed Chair Jerome Powell on fighting inflation delivered March 21. The Fed is currently seen as likely to lift interest rates by a half percentage point at both the May and June policy-setting meetings. The move toward rates going higher, faster has sparked a selloff in the bond market that is leaving investors with some of their worst losses in years.
Oil prices are also still in the news. On the day before the jobs report comes out, ministers from OPEC, the Organization of the Petroleum Exporting Countries, are scheduled to meet and discuss oil production. The group has stated it would begin by increasing production by 400,000 barrels a day, but much speculation has surrounded whether the cartel will take a more proactive approach in lifting output and helping alleviate global oil supply woes in the wake of Russia’s assault on Ukraine.
What stocks are up?
Some of the week's top performing stocks were Tilray Brands (TLRY), Rolls-Royce (RYCEY), Antero Resources (AR), Range Resources (RRC), Cheniere Energy Partners (CQP).
Tilray Brands, a pharmaceuticals and cannabis company, had the biggest gain on a day when reports that a committee in the House of Representatives would hold a hearing on a bill to decriminalize marijuana circulated.
Oil stocks rose as commodity prices climbed in ongoing volatility. The sector’s best performers included Antero Resources, Range Resources, Cheniere Energy Partners and Coterra Energy (CTRA).
A wider rally in commodity prices drove basic materials stocks up. Shares of fertilizer producers the Mosaic Company (MOS), and CF Industries (CF) surged. Albemarle (ALB), a lithium producer, and Anglo American (NGLOY), a metals miner, also gained during the week.
What stocks are down?
Shares in the week’s biggest laggards included Okta (OKTA), Neogen (NEOG), Williams-Sonoma (WSM), Winnebago Industries (WSM), Fortune Brands Home & Security (FBHS).
Stocks most sensitive to the demand for housing were hard hit as rising bond yields have caused mortgage rates to shoot higher. Home builders Lennar (LEN), D.R. Horton (DHI) and Toll Brothers (TOL) were some of the worst performing stocks this past week.
Home furnishing retailers such as Kingfisher (KGFHY), Williams-Sonoma, Fortune Brands Home & Security also took hits along with Home Depot (HD) and Lowe’s (LOW).
Shares of Okta, a cybersecurity company, fell after it announced a small percentage of their clients might have been affected by a security breach in January 2020.
