Low Trading Volumes Have Investors Waiting for the May Jobs Report
Wage data are likely to overshadow the latest monthly jobs figure.
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* Trading volumes are well below their three-month averages.
* Investors are waiting for Friday’s May Employment Report.
* Here’s why the year-over-year May average hourly earnings figure is important.
As we wrap Thursday’s trading, outside of Nvidia NVDA, we see trading volumes in the portfolio’s holdings well below their trailing three-month average. Even volumes for the S&P 500 and Nasdaq Composite baskets are trailing their three-month averages. Coupled with the modest moves in the market benchmarks today and the lack of movement in the 10-Year Treasury yield, it tells us there was a lack of conviction in the market this afternoon and investors were waiting for tomorrow’s May Employment Report.
May job data so far this week, paints a picture of slower job growth, but as of now the market expectation still calls for the report to deliver 185,000 jobs, up from 175,000 in April. In today’s video, we discussed why we think the real figure to focus on will be the year-over-year May figure for average hourly earnings growth. The consensus figure sees it flat with April’s 3.9%, but the collected comments between the May PMI reports and both ADP’s Employment Change and Pay Insights reports for May suggest we could see Friday's number come in ahead of that.
If that is the case, combined with comments about inflation not backing down found in the May PMI reports, the market is likely to once again reconsider rate-cut timing prospects. However, if the year-over-year increase in May’s average hourly earnings surprises to the downside in a meaningful way and May job gains come in below those for April, we could see the market end this week on a strong note.
Based on what we see in the May Employment Report that is out tomorrow at 8:30 a.m. ET, we’ll plot our next move with our shopping list of stocks, which includes Waste Management WM, Labcorp LH, ServiceNow NOW, and a few others.
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At the time of publication, TheStreet Pro Portfolio is long NVDA, WM, LH and NOW.
