US Stocks Could Reverse Back to Support with NFP Release

US stocks could look at a pullback to support the latest employment numbers.

US30 – 4H Chart

US30 – 4H Chart

US30 trades at 33,342 with support at the 33,000 level if the numbers disappoint. 

Non-Farm payrolls, the United States employment release, will update traders on the health of the jobs market on Friday. A slowdown is expected, with 240k added on the month compared to 311k last month. 

The actual number could be even worse after the release of the ADP employment number this week. The ADP is a closely-watched barometer ahead of the NFPs. The payroll firm said the economy added 145,000 jobs, and annual pay jumped 6.9 percent in March. 

The expected number was over 210k; the reading marks the second sub-200k headline in the first three months of 2023. Data has shown signs of a cooling US economy, with weak manufacturing figures released at the start of the week. 

The recent data will have traders looking at a potential pause in the Federal Reserve’s interest rate hikes. The OPEC production cut could also increase oil prices, and the central banks would be challenged.

Weak Economic Data Builds Pressure On The Fed

The yield on the benchmark 10-year US Treasury bond has fallen to its lowest since last September, warning of a potential economic downturn. A drop in market rates usually reflects bets for interest-rate cuts, which some investors are now pricing into the market. 

“In this case, why are rates falling? Because the economy is fine, and inflation is returning to a long-run rate of 2%? If so, this is bullish for risk assets. Or are rates falling because storm clouds are gathering over the economy, led by worries in the banking industry? If this is the case, this is not bullish for risk assets,” said Wall Street analyst Jim Bianco. 

Traders can look at the NFP employment report and use the price channel developing in the US30.

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