US stock futures are sharply lower Friday morning after a dismal jobs report. The US economy was expected to add 190,000 jobs in March, but generated just 88,000, the smallest gain in 10 months. In addition, the unemployment rate fell from 7.6% from 7.7%, which is evidence that more and more discouraged workers are leaving the labor force. Futures were lower heading into the report, but accelerated to the downside after the numbers hit. Will the market be able to stop the bleeding during the session?
Even after Tuesday’s all-time high closes in the S&P and Dow, we talked about some faulty signals in the market. The Russell 2000 (NYSE:IWM) and Transports (NYSE:IYT), two sectors bulls look for to lead bull markets, sold off to begin the weak, breaking even their 50-day moving averages. The Homebuilders (NYSE:XHB), another sector that had led the market for the better part of six months, also accelerated to the downside Wednesday. The Financials (NYSE:XLF) as a whole have held up decently well, but you have seen relative weakness particularly in stocks like Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS).
When the market is in turmoil and potential panic can enter the equation, it is best to narrow your focus. Concentrate more on the short-term complexion in the indices than normal, and perhaps pick only one stock to focus on in each sector.
Another asset to potentially watch with today’s panic could be Gold (NYSE:GLD). After cascading lower to test macro support early in the week, GLD is up a little bit this morning as a contra fear trade to the market. GLD is opening sharply higher this morning, watch to see if it can continue to bounce. One factor to keep in mind is that the Fed is unlikely to pull back on the reigns of QE, which is inflationary and bullish for Gold, as long as we get jobs reports like this.