U.S. stocks hovered near the flatline Friday as investors kicked off the first trading day of the quarter and mulled fresh unemployment data out of Washington.
The S&P 500 erased earlier gains to fall to a session low, and the Dow Jones Industrial Average slid below breakeven. The Nasdaq Composite also struggled for direction as it wavered around the flatline. The moved come as traders attempt a comeback from the worst quarter for stocks since the start of 2020.
Investors on Friday are closely monitoring the Labor Department’s monthly jobs report, the most up-to-date snapshot of the strength in hiring across the U.S. economy. U.S. employers added 431,000 jobs in March. Consensus economists were looking for non-farm payrolls to rise by 490,000, according to Bloomberg data, slowing from February’s 678,000 gain but still marking an increase well above pre-pandemic trends. The unemployment rate fell to 3.6% compared to 3.7% expected — the lowest since February 2020.
Stocks are pushing ahead into April following a volatile month and quarter of trading. The S&P 500 and Dow each dropped more than 4.5% for the first three months of 2022, closing out their worst quarters — and first quarterly declines — since the first quarter of 2020. The Nasdaq Composite saw the biggest decline, shedding 9.1% over the past three-month period, as investors rotated away from the technology and growth stocks that had led the market higher last year.
April has historically been a strong month for stocks, and has in fact produced a positive return for the S&P 500 in 15 of the last 16 years, according to LPL Financial’s Ryan Detrick. This time, however, stocks are facing a variety of headwinds that may upend this historically positive seasonality.
Namely, a confluence of concerns around the geopolitical and macroeconomic backdrop contributed to stocks’ worst quarterly performance in two years, and have yet to be fully resolved. Geopolitical risks have been elevated since Russia’s invasion of Ukraine in late February, raising the specter of further snarls to global supply chains that have already been struggling to recover from pandemic-era disruptions. A broad-based spike in prices, and in oil and energy prices especially, has further stoked concerns over the resilience of the consumer — the key driver of the domestic economy — going forward. And the Federal Reserve has begun a protracted process of raising interest rates and tightening financial conditions in a market that had grown accustomed to easy monetary policy since 2020.
“I think investors are very happy that the quarter is over. It was a tough one. Obviously inflation was bad all the way until … the end of the quarter,” Robert Cantwell, Upholdings portfolio manager, told Yahoo Finance Live on Thursday. “And in all likelihood, the next four to six weeks, it’s likely going to continue to be bad news because inflation is persistent, and we’re still comping record growth rates from the first four months of last year.”
“That said, as you get to the second half of next quarter, you could see a scenario where growth rates start accelerating again while inflation tempers, and that has the potential to bring a lot of the bulls back into the market,” he added.
LPL Financial points out that corporate profits may be another component driving the latest rebound in equities. Even in the face of war in Eastern Europe and decades-high inflation, earnings have been holding up, and estimates for S&P 500 Index earnings per share over the next four quarters are higher in March. Although not by much at 1.5%, the positive forecast is significant under the circumstances – particularly compared to how other countries have fared. Inflation is driving the more sizable corporate profits as companies enjoy more pricing power as they pass along higher costs to customers.
“On the back of energy independence, the trajectory of U.S. corporate profits has been unaffected by rising energy costs and high inflation so far,” LPL Financial equity strategist Jeffrey Buchbinder noted, adding that conversely, earnings expectations in international markets have fallen in March. “The U.S. profit outlook is the envy of the world right now.”
Elsewhere on the companies front, meme-stock favorite GameStop revealed in a form 8-K filed with the SEC after the bell Thursday that the video-game retailer will seek approval for a stock split at its upcoming shareholder meeting. GME is following a growing list of major companies — Alphabet, Amazon, Tesla — it what could be the “summer of stock splits.” Stock splits are a corporate action taken to improve trading liquidity and make shares more affordable without impacting market capitalization. GME rallied as much as 20% in extended trading to a 4-month high of more than $200 per share following the news.
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11:18 a.m. ET: General Motors stock falls after carmaker reports decline in Q1 deliveries
Shares of General Motors (GM) dipped after the automaker reported its U.S. deliveries fell 20.1% in the first quarter to 512,846, dragged down by Buick deliveries which more than halved.
GM was down 1.5% to $43.10 per share as of 11:16 a.m. ET.
“Supply chain disruptions are not fully behind us, but we expect to continue outperforming 2021 production levels, especially in the second half of the year,” the carmaker said Friday.
General Motors also indicated the company expects inventory to remain “relatively low throughout the year due to high demand.”
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11:02 a.m. ET: JPMorgan ditches Apple, Qualcomm from top picks list
JPMorgan dropped iPhone giant Apple (AAPL) and chipmaker Qualcomm (QCOM) from the brokerage’s “Analyst Focus List,” indicating slowing demand for smartphones is expected to put a dent in the companies’ growth.
The move comes as analysts warned that another wave of COVID lockdowns in China and higher prices on goods are likely to weigh on demand this year.
“There has been understandably a lot of noise around demand weakness across global tech, but we believe the macro weakness seeping through the sector will impact the consumer end-markets more materially,” JPMorgan analyst Samik Chatterjee said.
Apple already reportedly has plans to limit production on some iPhones and its AirPods due to a decrease in demand.
Shares of the tech giant were down 0.5% as of 11:01 a.m. ET to $173.75 a piece. Qualcomm fell 3.7% to $147.12 per share.
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9:30 a.m. ET: Stocks rise following March jobs report
Here were the main moves in markets at Friday’s open:
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S&P 500 (^GSPC): +12.54 (+0.28%) to 4,542.95
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Dow (^DJI): +74.62 (+0.22%) to 34,752.97
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Nasdaq (^IXIC): +70.78 (+0.50%) to 14,291.30
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Crude (CL=F): -$1.01 (-1.01%) to $99.27 a barrel
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Gold (GC=F): -$23.10 (-1.18%) to $1,930.90 per ounce
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10-year Treasury (^TNX): +9.9 bps to yield 2.4260%
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8:30 a.m. ET: New payrolls come in lower than expected
The U.S. economy notched another sizable payroll gain in March as the labor market extending its strong and speedy recovery to bring employment back to pre-pandemic levels. U.S. employers added 431,000 jobs, lower than the expected 490,000 jobs.
Meanwhile, the unemployment rate dropped a more-than-expected two-tenths of one percent, edging closer to the historic low of 3.5% seen in February 2020, Bankrate senior economic analyst Mark Hamrick noted, though pointing out that the labor force participation rate remains 1 percentage point below its pre-pandemic level.
The labor force participation ticked up slightly to 62.4% after an unexpected jump to 62.3% in last month’s data signaled more individuals were returning to look for work or be placed in jobs after being sidelined by COVID-19.
“Beyond the positive March snapshot, the outlook for the next year is for further moderation in jobs creation,” Hamrick said in a note. “Emboldened by exorbitantly high inflation, a hawkish Federal Reserve feels compelled to slam on the brakes. It is hard to imagine how tightening doesn’t ultimately affect the job market.”
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7:14 a.m. ET: Futures charge higher to kick off April trading
Here were the main moves in futures trading ahead of the open Friday:
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S&P 500 futures (ES=F): +22.00 points (+0.49%) to 4,552.75
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Dow futures (YM=F): +172.00 points (+0.50%) to 34,790.00
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Nasdaq futures (NQ=F): +80.00points (+0.45%) to 14,948.75
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Crude (CL=F): +$0.14 (+0.14%) to $100.14 a barrel
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Gold (GC=F): -$21.90 (-1.12%) to $1,932.10 per ounce
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10-year Treasury (^TNX): 0.00 bps to yield 2.3270%
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6:24 p.m. ET Thursday: GameStop surges to 4-month high after filing stock split plans
GameStop (GME) shares rallied in extended trading following an announcement after the bell indicating the video-game retailer plans to seek approval for a stock split.
The meme-stock favorite rallied as much as 20% in extended trading to a 4-month high of more than $200 per share following the news.
The company said in an 8-K SEC filing it plans to request stockholder approval at its upcoming annual shareholder meeting to increase the number of authorized Class A shares from 300 million to 1 billion in order to implement the split through a dividend.
With GME following suit on a growing list of companies recently reporting similar plans – Alphabet, Amazon, Tesla – it could be the “summer of stock splits.” Stock splits are a corporate action taken to improve trading liquidity and make shares more affordable, without impacting market capitalization.
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6:10 p.m. ET Thursday: Futures tick up slightly ahead of first April trading day
Here’s where the major stock index futures opened heading into the overnight session Thursday:
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S&P 500 futures (ES=F): +12.25 points (+0.27%) to 4,543.00
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Dow futures (YM=F): +96.00 points (+0.28%) to 34,714.00
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Nasdaq futures (NQ=F): +49.75 points (+0.33%) to 14,918.50
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Crude (CL=F): +$1.04 (+1.04%) to $101.32 a barrel
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Gold (GC=F): -$12.20 (-0.62%) to $1,941.80 per ounce
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10-year Treasury (^TNX): -3.1 bps to yield 2.3270%
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.
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