The major market ETFs did an about face today as reports showed that economic activity is more or less entrenched in a sideways pattern. Additionally, caution remained ahead of tomorrow’s jobs report, which will be released prior to the market opening.
The big report of the day, the ISM manufacturing index, showed that manufacturing is still growing, but at rate that could be considered stall speed. Other economic data were not horrible, but sure don’t sound too encouraging with overall sentiment being one of concern.
As is the case every month, the jobs report can move markets in either direction. A small gain in jobs is expected (estimate is 90,000) in the face of government agencies on all levels (federal, state and local) shedding employment.
However, powerhouse Goldman Sachs today cut its jobs estimate from 50,000 to 25,000 based on weak hiring in July/August and “a sharp deterioration in perceptions of job availability,” among other reasons.
Of course, everybody is just guessing, but a much weaker than expected report is certain to pull the markets lower, at least initially. If, as a result, hopes of an additional assist from the Fed surface, you may even see a rally.
Be that as it may, we will keep our hedged positions until after Labor Day and will reevaluate them at that time.