The Dow Jones Industrial Average (^DJI 1.00%) dropped 29 points, to 16,366, as of 1:30 p.m. EST after two negative reports on the jobs market. The S&P 500 (^GSPC 1.42%) was just above breakeven at 1,875.
There were two U.S. economic releases today.
|
Report |
Period |
Result |
Previous |
|---|---|---|---|
|
ADP private sector employment |
February |
139,000 |
127,000 (r) |
|
ISM nonmanufacturing index |
February |
51.6% |
54% |
The Automatic Data Processing private sector employment report greatly revised downward the January figure from 175,000 nonfarm jobs added to just 129,000. Economists expected the February report to show an addition of 160,000 jobs, but the private sector added just 139,000, the lowest level since summer 2012.
ADP Change in Nonfarm Payrolls data by YCharts.
The second report was the Institute for Supply Management nonmanufacturing purchasing managers' index, which fell from 54% in January to 51.6% last month, below analyst expectations of 53%. Readings above 50% indicate economic expansion while anything below 50% indicates contraction. The index was led down by a 8.9 percentage point drop in the ISM nonmanufacturing employment index from 56.4% to 47.5%, an indication of slower job growth.
Source: Institute for Supply Management.
Many economists have tried to lay the blame for slower economic growth and jobs on the terrible winter the U.S. is experiencing, but as Federal Reserve Chairwoman Janet Yellen noted last week: "A number of data releases have pointed to softer spending than many analysts had expected. Part of that softness may reflect adverse weather conditions, but at this point it is difficult to discern how much."
The Federal Open Market Committee meets in two weeks to discuss monetary policy. Given the last statement from the committee and recent speeches from its members, I fully expect the Fed to continue with the taper of its long-term asset purchases.
What's an investor to do?
Your investment strategy shouldn't depend on the latest economic releases. The story remains the same. The economy continues to slowly grow, the housing market is slowly getting healthier, and the market is still overvalued. I'm holding some extra cash, continuing to educate myself, find great companies, and invest for the long term.
