U.S. equities bounced around the unchanged line on Thursday as investors were loath to make any big moves ahead of Friday’s pivotal non-farm payrolls report.
This will be the last read on the jobs market ahead of next week’s Federal Reserve policy meeting where officials are expected to raise interest rates again for the second time in three months; a serious acceleration of the prior pace of just two rate hikes in the past 10 years.
In the end, the Dow Jones Industrial Average gained a fraction, the S&P 500 added 0.1%, the Nasdaq Composite wafted up a fraction and the Russell 2000 fell by 0.4%.
Treasury bonds were weaker (continuing the worst selloff in more than 40 years), the dollar was mixed, gold declined for the eighth straight session and crude oil continued Wednesday’s nasty slide down another 2%. That boosted the ProShares UltraShort Crude Oil (NYSEARCA:SCO) recommended to Edge subscribers to a gain of 12.4% as West Texas Intermediate fell below the $50-a-barrel level for the first time since December following bearish inventory data, increasing U.S. rig activity and a lack of compliance by non-OPEC nations with last year’s production freeze agreement.
Despite this, energy and healthcare led the way with gains of 0.6%. Yield-sensitive REITs were the laggards down 1.3%. Marathon Oil Corporation (NYSE:MRO) gained 8.1% after announcing the sale of its Canadian oil-sands business to Shell and Canadian Natural Resources for $2.5 billion in cash alongside a $1.1 billion acquisition in the Permian Basin. Sears Holding Corp (NASDAQ:SHLD) — fending off bankruptcy fears — gained 6.9% after reporting a narrower-than-expected Q4 loss thanks to inventory and cost management efforts.
On the downside, Staples, Inc. (NASDAQ:SPLS) fell 5.3% after reporting weak earnings and revenues 9% below estimates.
Beneath the surface, however, there was some excitement as sellers descended on the financials after the White House press secretary confirmed that President Trump — as he hinted on the campaign trail — strongly supports the restoration of the Depression-era Glass-Steagall Act that was removed in the 1990s. It forced the separation of riskier investment banking activities from deposit-taking commercial banking activities.
While this is widely seen as a good thing for the health of the financial system and the sanctity of savings accounts, it’s bad news for the profits hounds on Wall Street. In other political news, the Republican healthcare reform bill is moving through the legislative process clearing committee level votes.
Looking ahead to the employment situation report tomorrow, analysts are looking for a payroll gain of 200,000 on a slight drop in the unemployment rate to 4.7%.
Keep an eye on wage inflation, with pay raises eagerly anticipated as small business survey data shows a continued tightening of the labor market and increasingly scarcity of qualified workers — something that will pour gasoline on the fires of inflation throughout the economy.
Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers. Redeem by clicking the links above.