Just kidding - APRIL FOOLS!

It’s actually another very sad selloff indeed, with the major equity indices all opening and staying in the red. A whole slew of economic data is keeping the market sedated and are doing very little to provide any optimism for Friday’s jobs report. However, this data does give further confirmation that the Federal Reserve will abstain from raising interest rates anytime soon. Crude oil prices are helping drive some stocks today, as the weekly inventory data showed a 12^th consecutive build at 4.8 million barrels. However this result was much more closely aligned with the consensus estimate for a build of about 4.4 million barrels and is subsequently lifting the price of oil nearly 5% higher to around the $50-per-barrel level.

Today’s weakness among the major equity indices is no mystery once you take a look at the rather disappointing economic data released throughout the morning session. Firstly, ADP’s jobs data for March is spelling trouble for the Bureau of Labor Statistics’ (BLS) jobs report out later this week. ADP reported the creation of 189,000 jobs in March which was well below the consensus estimate of 230,000 and the BLS estimate of 240,000 for Friday’s private payroll report. However, the data for February tracked much lower than the government’s data at a slightly-upwardly revised 214,000 for ADP and 288,000 for BLS. Expectations are nowhere near as high as they were for Friday’s jobs report, which is the main underlying reason that the indices remain in the red.

Next, despite Markit displaying seemly strong optimism for the manufacturing sector, the same optimism was not reflected in the manufacturing purchasing managers index (PMI) reported by the Institute for Supply Management (ISM). Overall, weak exports pulled down ISM’s composite index by 1.4 points in March to a reading of 51.1. This is well below the consensus forecast of 52.4 and is at present the lowest reading since May 2013 (noted by the dotted blue line in the chart below). New orders were also weak, falling by seven tenths to 51.8 for the lowest reading since April 2013. Thanks to a stronger US dollar, this marks the third straight month of contractions for new export orders, which were down by 1.0 to 47.5 for the weakest reading since November 2012. ISM’s March data showed no net hiring for the month with the employment index at the breakeven level of 50.0, for the lowest reading since May 2013. The prices paid component remains low, but slightly higher over the prior month at a reading of 39.0. This is the fifth consecutive month that prices remained in the contractionary zone. Ultimately, this report points to another month of trouble for government manufacturing data. Overall weak foreign demand appears to be pulling down U.S. growth.

Lastly, construction spending appears to be light, showing a month-over-month decline. Construction spending dipped by 0.1% in February, after falling by a sizable 1.7% in January over the prior month, while expectations were actually for a 0.2% increase. The decrease for the month was primarily led by public outlays which declined by 0.8%. Private, nonresidential construction spending got a 0.5% boost in the month while private residential spending slipped by 0.2%. Year over year, total outlays were up 2.1% in February following a 1.4% increase in January. It’s apparent that the adverse weather effects across much of the US are still affecting construction-related data. However, there’s a good chance that normal weather will bring about a normal rebound for the spring season. Ultimately though, this data means another tick in the negative column for first-quarter gross domestic products (GDP) figures.