This week’s jobs report is shaping up to be more important than usual. Last Friday saw economic growth come in slower than anticipated as wages are increasing at its slowest pace ever on record. Then, there was yesterday’s report on personal income and consumer spending. The former is up 0.4%, while the latter has increased by only 0.2%. Weaker paychecks have naturally played a part in less consumer spending. However, savings in the first quarter is up 5.2%, the highest in years, which reflects something more than punk pay increases.
There’s an anxiety normally associated with the start of a recovery, not the top where there is often unbridled confidence.
Business investment is abysmal; consumers are largely on strike, save for going out to dinner, and it’s resulted in a market losing its footing.
Interestingly, even as crude oil continues to decline and presumably gasoline prices as well, consumers are not spending. Yesterday’s selling in the oil patch caused an accumulation of pressure to break the dam, but it was timely as China’s manufacturing woes triggered the latest round of selling.
Crude oil is back to the March lows and it will have to make a stand.
However, there’s no doubt that China’s demand for all commodities has made the difference for years; the question is, has it all evaporated and is there any other demand picking up the slack? For the moment, the bias is strongly to the downside as selling begets selling.
The market reversed off the low of the session in the afternoon, but all the major equity indices finished lower for the day, while the Dow Jones Industrial Average (DJIA) continues to make a series of lower highs and lows. Of course, those Blue Chip oil stocks have become like anvils for the index.
The Dow moving through 17,800 could signal a big rally into the more treacherous fall months, but more importantly, it is holding above Monday’s lows.