The Employment Cost Index for Q4 came in below estimates, and fewer jobs were added in January according to ADP NonFarm. Gold is higher, while stock indices struggle.
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Good afternoon, traders. It’s Chris Chavez with Blue Line Futures and it’s your daily midday market minute. The S&P and the Dow Jones hit a new high and crude oil iand it’s your daily midday market minute earnings and labor market data weigh on stock indices here today. But before we get to it, if you’re watching this video like it subscribe if you go to our website, there’s also a link to direct you to YouTube. You can subscribe that way.
We would love for you to follow us. We would love for you. Help us build our following. Yeah. So we did get some earnings after the bell yesterday. Microsoft, Google reported and both beat really, but expectations have just been so elevated in some areas inside of the revenue stream just didn’t really show up how the markets wanted to see.
And we’re trading a bit lower now. Really what exacerbated that here this morning is the sharp move that we saw on Treasury yields. The ten year yield now below 400 basis points. As we got some employment data, we got the employment cost index, which came in at the lowest level seen since the second quarter of 2021, 9/10 increase versus a 1% expectation.
That was for Q4. We also got ADP nonfarm and a print less that came in under expectations, 107,000 jobs versus 145. And we got a downward revision for the month of December. So it saw a little bit of weakness there, especially in the labor market data. And that’s really what’s putting a big move on Treasury yields here today and seeing a little bit more pressure puts on risk assets, specifically stock indices.
One thing that’s interesting here today is that the Russell is really struggling to despite lower Treasury yields. And again, I think that really with that being the case, there is just concern about a slowdown happening, interest rates coming down is not always a bullish tailwind for stocks in really as soon as it happens, it takes time for that accommodation to maybe take effect and come through the economy.
And there is always that initial knee jerk reaction. So that could be what you’re seeing today. Maybe the markets getting a little bit spooked about, you know, economic growth fears and worsening labor market conditions. So like I mentioned, the ten year yield below 400 basis points. One thing that’s really interesting today, the Fed watch tool for the March meeting is now pricing in a 63% chance of a cut that is up from 37 to 38% yesterday.
So those are the odds of a cut nearly doubled today. And you’re starting to see a little bit more conviction that we may actually see interest rate cuts a bit sooner than yesterday’s expectations. Now, precious metals are one of the big outperformers here today. Specific like gold. Silver is lagging behind. Copper is in negative territory. But remember, copper has got the industrial applications and they say copper knows, right?
Dr. Copper It’s a great forward looking indicator for the economy. Silver has a lot of industrial applications as well, so you’re going to see the correlation from the industrial element and also the precious metal element. And Silver is trying to stay above positive territory here today, but we are off of those highs pretty sharply in gold is the big outperformer yields are coming down.
Flight to safety trade that’s why you’re seeing gold really outperform. Now today we will get Jerome Powell, the FOMC press conference at 1 p.m.. That’s going to be really, really important. Metals will actually settle before this press conference. So that’s going to be an interesting thing to see, is that the metals will actually settle and finish out this month and then we’ll get the Fed press conference.
You could see a big move after that. Now, guidance from Fed Chair Powell is going to be really important. I imagine you’re going to get some reporters that definitely ask about the slowdown in some of this labor market data and the path of the Federal Reserve. And it’s priced in. We’re not going to see a cut at today’s meeting.
Anything that would show different if you did see a surprise cut, markets could freak out. You could had higher or lower. You know, this could be interpreted a few ways. So really want to pay attention to the guidance more than anything at today’s press conference. And tomorrow we’ll get more labor market data initial and continuing claims, unit labor costs nonfarm and a lot of manufacturing data.
Some of these technicals, a three star support level for the S&P 4885 to 48, 89 one to hold above their Nasdaq US three star support level to keep an eye on as well. 17 to 36 to 17 to 45. Crude oil a four star level again with the weakness in labor market data here today, it’s probably some demand fears, global growth fears.
So I want to hold above 7508 to 7531. That’s a four star level that we pegged in our research. And silver, a major pivot pocket is 2322. If we can at least hold above here, I think that would be a little bit more bullish for the metal moving forward. If you have any questions, reach out to our trade desk.
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