The week leading up to Good Friday and Easter got off to a quick start as the Institute for Supply Management (ISM) released its March Manufacturing PMI number. The final result was 46.3, which was below the forecast of 47.7 and was the fifth straight month in which the PMI number was below 50.
This indicates a contraction within the manufacturing sector that may be a precursor to a larger economic slowdown. It may also be a sign that the Federal Reserve may have to rethink future interest rate hikes. The federal funds rate currently sits at 5 percent after it was raised by 25 basis points in March. Federal Reserve Chairman Jerome Powell has indicated that additional increases may be warranted but that they would be dependent on future data.
On Tuesday, the Job Openings and Labor Turnover Survey (JOLTS) was released. It found that there were 9.93 million available positions in the United States, which was the lowest since the 9.21 million recorded in July 2021. Analysts had expected the March figure to be closer to 10.49 million prior to the survey’s release.
Wednesday saw the release of important reports both before and after the trading day began in New York. At 8:15 a.m., the ADP Nonfarm Employment Change report was released and declared that 145,000 jobs were lost between February and March. Prior to release, it was believed that the report would show a gain of 208,000 jobs. At 10 a.m., the ISM Services PMI was released and came in at 51.2 percent, which was lower than the forecast estimate of 54.3 percent.
The news did provide some opportunities for traders looking to buy dips or to make short-term trades. On Monday, the S&P broke the 4,100 level, which was a yearly high, and the market continued higher on Tuesday before reversing and settling into a trading range between 4075 and 4115 for most of Wednesday and Thursday. For the week, the index lost 0.1 percent, lowering the yearly gain to 6.9 percent.
The Dow spent most of the week between 33,000 and 33,500, which is a retest of a high set in March. For the week the Dow gained 0.6 percent and has now gained 1.0 percent gain in 2023.
The NASDAQ peaked at 13,192 on Tuesday before easing back to 13,086 at the close of trading on Thursday. This index has gained over 15 percent in 2023, despite dropping 1 percent on the week.
Gold spent the first three days of the week making significant gains as it surged from the 1950 level to 2025 by Wednesday. This represents the high of the year and a break of a high set in February. Although gold prices fell slightly on Thursday, they are still hovering close to $2,000 an ounce. An increase in gold prices combined with a contraction in the manufacturing and services sectors may be a sign that investors are trying to hedge against near-term uncertainty.
Oil prices quickly climbed above $80 a barrel on Monday before trading mostly sideways on Tuesday, Wednesday and Thursday. This represents a break above the March high and puts the commodity in position to threaten yearly highs going into the holiday weekend. Exxon stock jumped from $109.44 at the close of trading on March 31 to $114.92 upon the opening bell Monday morning. It would then peak at $117.18 during Monday’s session before dropping 2 percent on Thursday to close at $115.06.
The CBOE Market Volatility Index (VIX) stayed in a tight range for most of the week as traders were not keen to make major moves in anticipation of Friday’s Nonfarm Payroll report issued by the Bureau of Labor Statistics (BLS). That report showed that the economy gained 236,000 jobs in March, and the unemployment rate dropped from 3.6 percent to 3.5 percent. Average hourly earnings went up .3 percent during that period, which beat the forecast of .2 percent.