The S&P 500 (SPY) and the Nasdaq (QQQ) finished today’s trading session in the green after rebounding from a bad start, while the Dow Jones (DIA) closed out flat. Interestingly, the trading volume for the SPY ETF was significantly lower than average at over 49 million compared to 56 million. In addition, the Consumer Discretionary sector (XLY) was the session’s leader while the Healthcare sector was the laggard. Separately, the U.S. job market is showing signs of a slowdown, even though it remains relatively stable.
In February, employers posted 7.6 million job openings, down from 7.8 million in January and 8.4 million a year earlier. Layoffs rose to 1.8 million as 18,000 federal workers were let go – the most since October 2020. Retail layoffs were also significant at 238,000, which was the highest since the early days of the pandemic.
Meanwhile, the number of people quitting their jobs declined, suggesting that workers are feeling less confident about finding better opportunities. As a result, Economists expect the upcoming March jobs report to come in at 125,000 new jobs, down from 151,000 in February, with the unemployment rate ticking up to 4.2%.
Slowdown in U.S. Manufacturing
This cooling in the labor market is happening alongside a fresh slowdown in U.S. manufacturing. Indeed, the ISM manufacturing index fell to 49.0 in March from 50.3 in February (a reading below 50 indicates a contraction). New factory orders dropped to 45.2, the lowest since May 2023, while employment in manufacturing slipped to 44.7. In addition, input prices spiked to 69.4, the highest since June 2022, which added to inflation concerns.
Much of this economic uncertainty is tied to President Trump’s aggressive trade policies. Since returning to office, he has imposed a 25% tariff on imported cars and raised duties on steel, aluminum, and goods from China. More tariffs are expected to be announced on April 2, which has been dubbed “Liberation Day.” Although these moves are aimed at supporting U.S. industry and funding tax cuts, they are raising fears of inflation and lower growth. As inflation climbs and confidence among businesses and consumers falls, the key question is whether the job market can continue to hold up under the mounting pressure.