Stocks Under Pressure after Weaker than Expected Nonfarm Payrolls Report

January 6, 2017 3:23AM CST

What is Nonfarm Payroll?

The nonfarm payrolls released by the US Department of Labor present the number of new jobs created during the previous month, in all non-agricultural business. The monthly changes in payrolls can be extremely volatile, due to its high relation with economic policy decisions made by the Central Bank. The number is also subject to strong reviews in the upcoming months, and those reviews also tend to trigger volatility across the forex board. Generally speaking, a high reading is seen as positive (or bullish) for stocks, while a low reading is seen as negative (or bearish), although previous months reviews ​and the unemployment rate are as relevant as the headline figure, and therefore market's reaction depends on how the market assets them all.

This past week, Wall Street was been expecting a 178k payrolls print for president Obama’s final full monthly December jobs report, however the December nonfarm payrolls number disappointed us coming in at 156k. On the other hand, however, average weekly earnings continued their muted performance, rising 2.3% Y/Y in December.

December Nonfarm Payrolls Effect on Stocks:

S&P 500:

The bulls in this market needed a fresh injection of optimism from payrolls, however after a nonfarm payroll increase of just 156k this was far from an expected 175k. So far the Mini S&P remains just above unchanged on the day at 226550. Global equity markets were mostly lower overnight in the wake of softer Euro zone data, and I expect stocks to remain under pressure going into next week after this morning’s release of weak economic data.

Emini Daily

Other US Indexes

The Mini-Dow has shown some erosion on the charts this week and pushing into the market today, we have to favor the bear tilt. Down trend channel resistance is seen up at 19,862, and there might be little in the way of support seen until the 19,733 level. The Mini-Nasdaq seems to be poised to out-perform the rest of the marketplace with favorable close and the capacity to hold near the recent highs.

Overall, the December Nonfarm Payrolls number came out weaker than expected and we can assume stocks will trade lower throughout next week and possibly into the inauguration.

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.