Private Payrolls Gain Signaled Faster Rate Hikes Ahead

Barry Adams
08 Mar, 2023
New York City

Major averages edged higher as investors digested recent comments from the Federal Reserve chairman and awaited Friday's jobs data. 

U.S. Treasury yields hovered near 16-year highs as investors mulled faster rate hikes and higher peak rates in the month ahead. 

Private payrolls expanded at a faster pace in February, suggesting tight labor market conditions to persist despite multiple rate hikes over the last twelve months. 

What is good news on the Main Street is bad news on Wall Street as investors fear that rates may have to go further in the restrictive territory before the inflation cools and may push the economy towards a recession. 

Employment report tracking payrolls across all sectors of the economy are scheduled to be released on Friday by the U.S. Labor Department and investors are anticipating net job gains of closer to 300,000. 

 

February Private Payrolls Growth Accelerated 

Private sector net job addition accelerated in February, according to the latest monthly report released by the payrolls processing company ADP. 

 U.S. private payrolls increased by 242,000 in February, higher than the revised 119,000 increase in January. 

The February's gains were driven by 190,000 additions in the service sector and 52,000 increase in the manufacturing sector. 

Overall wage gains decelerated to 7.2%.  

 

U.S. Trade Deficit Edged Higher In January 

The U.S. trade deficit in goods and services increased slightly in January after exports rose faster than imports, the Bureau of Economic Analysis reported Wednesday. 

Exports increased 3.4% and soared 13.3% to $257.5 billion.  

Imports rose 3.0% from the previous month and jumped 3.5% to $325.7 billion. 

Overall trade deficit for goods and services increased 1.6% from the previous month but fell 21.9% from the previous year to $68.3 billion.  

 

Indexes & Yields 

The S&P 500 index increased 0.1% to 3,992.05  and the Nasdaq Composite index inched higher to 0.4% to 11,576.86. 

The yield on 2-year Treasury notes hovered near 5.0%, 10-year Treasury notes inched lower to 3.96% and 30-year Treasury bonds traded around 3.84%. 

Crude oil prices declined 96 cents to $76.58 a barrel and natural gas prices eased 14 cents to $2.54 a thermal unit. 

 

U.S. Stock Movers 

Occidental Petroleum Corporation increased 1.4% to $61.70 after a regulatory filing showed that the Warren Buffett controlled Berkshire Hathaway increased its stake in the company by purchasing 5.8 million additional shares last week. 

Crowdstrike Holdings Inc added 1.3% to $126.57 after the cybersecurity company reported better-than-expected quarterly results. Revenue in the fourth quarter increased to $637 million and earnings per share rose to 47 cents. 

Stitch Fix Inc dropped 13.5% to $4.31 after the online fashion platform reported wider-than-expected loss. 

Stitch Fix Inc said revenue in the fiscal second quarter ended on January 28 declined 20% to $412.1 million and net loss expanded to $65.6 million from $30.9 million and diluted loss per share rose to 58 cents from 28 cents a year ago. 

BlackBerry Ltd increased 4.2% to $3.65 after the cybersecurity company reported preliminary quarterly results. 

BlackBerry Limited said preliminary revenue in the fourth quarter is expected to be $151 million, including $107 million in cybersecurity billings.