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U.S. equity index futures decline: Nasdaq 100 off ~1%
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Euro STOXX 600 index off ~0.9%
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Dollar, gold, crude up slightly; bitcoin off >2%
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U.S. 10-Year Treasury yield rises to ~3.63%
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TECH DOWNSIZING, MORE LIKE RIGHT-SIZING (0915 EST/1415 GMT)
Data last week hinted at a robust labor market with
plentiful job openings, but layoffs across Big Tech and major
Wall Street firms have sparked concerns about an economic
slowdown.
"You don't have a recession when you have 500,000 jobs and
the lowest unemployment rate in more than 50 years," U.S.
Treasury Secretary Janet Yellen told ABC's Good Morning America
program.
Analysts at Goldman Sachs echoed a similar refrain in their
note, adding that they believe the companies conducting layoffs
are not representative of the broader economy and many of the
recent layoff announcements do not necessarily signal weaker
demand.
Companies that are laying off have three things in common,
according to Goldman Sachs - they are likely to be in the tech
sector, they've hired aggressively during the pandemic and
they've have seen sharp drops in their share prices.
Tech companies laid off more than 150,000 workers in 2022
amid a rapidly fading pandemic-led demand boom, according to
tracking site Layoffs.fyi.
"Some of these companies have conducted layoffs to
right-size their workforce after over-extrapolating
pandemic-related trends that ultimately proved more fleeting
than expected, such as the preference for goods over services or
spending more time online," the analysts added.
"Some were more an effort to improve company valuations by
responding to investor demands to shrink workforces that were
perceived to have grown too large and expensive, rather than a
signal that the demand outlook had worsened."
Not every layoff translates into a lasting increase in
unemployment because most workers find new jobs, Goldman Sachs
said, adding that the job finding rate in recent months among
unemployed individuals has been high by historical standards.
(Bansari Mayur Kamdar)
*****
S&P 500 INDEX: REST OR RELAPSE? (0900 EST/1400 GMT)
The S&P 500 index has backed away from some
significant resistance hurdles. It now remains to be seen if a
setback will prove to be just a pause in what is a new
bull-phase, or if weakness will soon re-intensify, leading to a
resumption of the prevailing bear trend:
Last week, the SPX hit a high of 4,195.44, rallying as much
as 20% off its October 13 intraday low. With this recovery, the
benchmark index recouped as much as 84% of its August-October
down-leg, and as much as 53% of all its bear-market losses on a
intraday basis.
However, the benchmark index failed to overwhelm the
4,198.70-4,203.04 area. This zone includes the 23.6% Fibonacci
retracement of the March 2020-January 2022 advance, now acting
as resistance, and the August 26 high, which was established the
day of the market's vicious downside reversal stoked by Fed
Chair Powell's especially hawkish speech at the Jackson Hole
Symposium.
The late-August reversal left an unfilled gap to 4,218.70 on
the charts.
With e-mini S&P 500 futures suggesting the SPX,
which ended at 4,136.48 on Friday, is poised to fall around 30
points early in Monday's session, a support shelf defined by
September-to-January highs in the 4,119.28-4,094.21 area can
come under fire.
Traders will be watching to see how the SPX behaves around
this zone. The January 30 low was at 4,015.55, and the support
line from the October low is now around 3,925.
Meanwhile, last Thursday, the SPX saw a golden cross,
suggesting the potential that bulls are arresting control of the
primary trend.
(Terence Gabriel)
*****
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
