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Investors Get Bearish with Disappointing Non-Farm Payroll Data

David Meyer

Non-Farm Payroll Data Disappoints: How Did Global Markets React?

Disappointing non-farm payroll data pulls markets down

At 12:30 PM EST on May 6, 2016, the US markets were trading lower due to the dismal non-farm payroll data released earlier. There were 160,000 jobs created in April, in comparison to expectations of 202,000. The March figure also faced a downward revision, to 208,000. The unemployment rate, on the other hand, remained steady at 5%. Investors were bearish on increased speculations of more rate hikes this year by the US Federal Reserve.

At 12:30 PM EST on May 6, 2016, the S&P 500 VIX index fell by 0.75%. The S&P 500 Futures index and the Dow Jones Industrial Average also fell during the day, by 0.37% and 0.16%, respectively. NASDAQ futures were trading 0.58% lower. The US dollar index weakened against other currencies and fell 0.1%.

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Fed members talk of policy stance

US Federal Reserve member Dennis Lockhart said he is “on the fence” about whether there should be a rate hike in June. He stated that inflation numbers need to increase and that there needs to be a stronger connection between economic growth and employment figures before the rate can be increased. Federal Reserve Bank of Dallas president Robert Kaplan said that he is bullish on a recovery in the economy leading to an interest rate this summer.

Impact on ETFs across SPDR indexes

Following the non-farm payroll release, the oil exploration and metals and mining sectors traded positively on May 6. The SPDR S&P Metals & Mining ETF (XME) was the outperformer for the day. It rose 1.6% at 12:30 PM EST. The Energy Select Sector SPDR ETF (XLE) rose 0.14%. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) rose 0.71% during the day.

Among the major sector-specific SPDRs trading negatively, the SPDR S&P Biotech ETF (XBI) fell by 1.9%. The Utilities Select Sector SPDR ETF (XLU) and the Health Care Select Sector SPDR ETF (XLV) fell by 1.2% and 1.4%, respectively.

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