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Markets Review/Preview: All Eyes on the Jobs Report

More strong readings on the labor market are expected as the Fed is seen moving higher, faster on rates.

Securities In This Article
Hess Corp
Albemarle Corp
Baker Hughes Co Class A
D.R. Horton Inc
Range Resources Corp

Expectations for a more aggressive pace of Federal Reserve rate increases are building, and the March employment report due April 1 may provide investors with more clues as to the path policymakers will take.

Last month's jobs report showed an employment landscape that remained strong despite the omicron variant, with 678,000 jobs added in February and the unemployment rate falling to 3.8%. At the time, Morningstar's chief economist, Preston Caldwell, said that even with strong gains in hiring over recent months, there's plenty of room for growth ahead.

"The labor recovery is far from finished," he said.

This past week brought another sign of the job market's strength as unemployment claims for the week ending March 19 fell to 187,000, the lowest since 1969.

The March report is expected to show another robust reading on employment with payrolls rising by an estimated 475,000, according to FactSet.

Prior to the official March report, investors will get more detail on the health of the jobs market with the Bureau of Labor Statistics' JOLTS report on job openings Tuesday and the closely watched ADP National Employment Report Wednesday.

The new jobs data comes as markets have begun pricing in a more aggressive pace of Fed rate hikes than was expected just two weeks ago. These expectations for a stepped up tightening of money policy follow hawkish remarks on fighting inflation from Fed Chair Jerome Powell made on March 21. The Fed is now expected to raise interest rates by a half percentage point at both the May and June policy-setting meetings. This shift toward rates heading higher, faster has triggered a bond market selloff that has investors facing some of their worst losses in years.

Oil prices also remain in the spotlight. The day before the jobs report is released, ministers from OPEC are set to meet to discuss oil production. The group has said it would gradually increase production by 400,000 barrels per day, but questions have swirled as to whether the cartel will move more aggressively to lift output and help ease concerns about global oil supplies following the Russian attack on Ukraine.

Among key events for the coming week:

For the trading week ended March 19:

  • The Morningstar US Market Index was 1.55%.
  • The best-performing sectors were energy, up 7.93%, and basic materials 4.12%.
  • The worst-performing sector was healthcare, down 0.4%.
  • Yields on the U.S. 10-year Treasury note rose to 2.49% from 2.15%.
  • Oil ended the week up 8.79% at $113.90 per barrel.
  • Of the 862 U.S.-listed companies covered by Morningstar 488, or 57%, advanced and 374, or 43%.

What Stocks Are Up?

The best performing stocks in the past week were Tilray Brands TLRY, Rolls-Royce RYCEY, Antero Resources AR, Range Resources RRC, and Cheniere Energy Partners CQP.

Tilray Brands, a pharmaceuticals and cannabis company, rose the most amid reports that a committee in the House of Representatives will hold a hearing on a bill to decriminalize marijuana.

Oil stocks advanced as commodity prices gained amid continued volatility. Antero Resources, Range Resources, Cheniere Energy Partners, and Coterra Energy CTRA were among the sector's best performers.

A broader rise in commodity prices also sent basic materials stocks higher. Fertilizer producers Mosiac MOS and CF Industries CF rallied. Lithium producer Albemarle ALB and metals miner Anglo American NGLOY also gained during the week.

What Stocks Are Down?

The worst stock performers in the past week were Okta OKTA, Neogen NEOG, Williams-Sonoma WSM, Winnebago Industries WGO, Fortune Brands Home & Security FBHS.

Stocks sensitive to housing demand took a hit as rising bond yields have sent mortgage rates sharply higher. Homebuilders Lennar LEN, D.R. Horton DHI, and Toll Brothers TOL were among the worst performing stocks in the past week.

Also taking a hit were home furnishing retailers Kingfisher KGFHY, Williams-Sonoma, Fortune Brands Home & Security, along with Home Depot HD and Lowe’s LOW.

The cybersecurity company Okta saw shares fall after it said a small percentage of its clients may have been affected by a security breach during January 2020.

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