Disappointing jobs data landed with a thud Friday. The only good news: Wall Street was empty.
A strange day in the markets: stocks closed; bond-trading hours shortened, forex markets thin. And yet the disappointing job report focused the attention. Steve Russolillo has details on The News Hub. Photo: Getty Images
The government said the economy added just 120,000 jobs in March, well short of expectations. Ordinarily, the news would have reverberated around the Street, roiling markets.
Instead, many trading desks were deserted as traders and clients took a day off for Good Friday. Stock and commodity markets were closed.
Robert Pavlik, chief market strategist at Banyan Partners, was shopping at Home Depot in Fairfield, Conn., when the news hit; Rick Bensignor, chief market strategist at Merlin Securities, a New York brokerage firm, was at home fiddling with his new iPad; and Mark Luschini, chief investment strategist at Janney Montgomery Scott, was catching up on his newspaper reading on his couch in Pittsburgh.
"I knew there was nothing I could do about it, so I looked at the numbers when I got free," said Mr. Pavlik, who spent the rest of the morning washing his deck. "There's no way for us to react, so I'm not freaking out about it. I'll deal with it come Sunday night."
But for those in the bond and currency markets, it was all hands on deck. Many bond-trading desks were close to fully stafFed, as fixed-income markets were open until noon EDT. Currency markets also were trading. Stock futures traded for a few hours.
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Treasurys jumped, the dollar fell and stock futures dropped 1%, suggesting the Dow Jones Industrial Average may fall on Monday. The news came after the stock market's worst week this year, in large part sparked by worries that the Federal Reserve may be less eager to start a new round of financial stimulus.
Many viewed the jobs report as a signal the Fed now may be more likely to start a third round of bond buying, or quantitative easing, known in the market as QE3. Added stimulus likely would put more dollars into the financial system, reducing the value of the greenback. Fed buying of bonds can also help send prices higher.
The yield on the 10-year note, which was hovering at about 2.20% before the release of the report, plummeted to about 2.07% in a matter of minutes. Yields, which move in the opposite direction to prices, continued to move lower, ending the day at 2.056%, compared with 2.173% late Thursday.
U.S. stock market futures dropped after the release of March jobs data, while the dollar slid and Treasurys rose. Paul Vigna has the details. Photo: Rick Bowmer/AP
"I think it brings up the QE3 question again, but one data point will not be enough to convince the Fed about the need for further easing," said Priya Misra, head of U.S. rates strategy research at Bank of America Merrill Lynch in New York.
The report created an unexpected flurry of activity on both sides of the Atlantic, putting extra strains on desks in Europe, where staffing was particularly low. Stock markets in Europe also were closed.
"In the hour after the jobs report, the amount of trades conducted by the one woman in our London office probably matched the number done by our 14 salespeople here" in Stamford, Conn., said Bob Sinche, global head of currency strategy for RBS Securities. Volumes in bond, currency and futures markets jumped but soon subsided, traders said.
"Nonfarm payrolls is the pinnacle gambling table at the casino," said David Gilmore, partner and analyst at Foreign Exchange Analytics in Essex, Conn. Mr. Gilmore said he was at his desk as usual at 5 a.m.
As for the likely reaction when firms are back to full power on Monday, many traders were mixed.
Mr. Bensignor said he expects markets to continue selling off on Monday and remained skeptical that the jobs number would change the thinking at the Fed.
"At this point, with what the Fed has said, I don't think one month's jobs number is going to change their mind. Their statement made it clear that things would have to get quite a bit worse for them to act," he said.
Others said the effect may wear off over the weekend. And the improved prospects for QE3, albeit slight, actually may help the stock market.
Can the stock market sustain its gains, or are investors facing a pullback? We'll discuss the outlook for the financial markets with Russell Investments Chief Market Strategist Stephen Wood on The News Hub. Photo: Brendan McDermid/Reuters
"Markets will obviously be impacted by the bad jobs number, but it ultimately lays the groundwork for more easing, and that's good for stocks," said Michael Yoshikami, chief executive of San Francisco-based Destination Wealth Management, which manages $1.2 billion in assets.
Mr. Yoshikami, who typically is awake to watch the jobs release at 5:30 a.m. California time, was on "holiday schedule" Friday, but said he saw the report about an hour later.
"This is a number that we watch very closely, and even if we can't trade it immediately, it's a data point that we want to look at to decide where we want to position ourselves," Mr. Yoshikami said. "On a day like today, I can guarantee you that my chief investment officer and all my analysts are looking at the numbers," Mr. Yoshikami said. "We're not just waiting for the markets. Even if this came out on a Saturday, I can assure you we'd be looking at that, too."
But once that work was done, Mr. Yoshikami grabbed his clubs and headed to the golf course.
"Now, I'm just going to have lunch and maybe putt around a little bit," he said.
—Tatyana Shumsky, Matthew Walter and Steven Russolillo contributed to this article.
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Write to Jonathan Cheng at jonathan.cheng@wsj.com and Matt Phillips at matt.phillips@wsj.com
A version of this article appeared April 7, 2012, on page B1 in some U.S. editions of The Wall Street Journal, with the headline: Idle Street Revs Its Engine.
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