Tuesday, May 1, 9:25 a.m.

On Saturday I said this week’s unusually heavy week of important economic reports in the U.S. and globally would likely decide the market’s direction for awhile.

But so far, even though the reports have been startling in some cases, the market has shrugged them off, and gone into idle mode. The Dow is up 40 points, or 0.3% for the week. The Nasdaq is down 0.3%, and the S&P 500 is unchanged.

Yet some of the reports have been dramatic. Among them, the Chicago PMI Index plunged from 63.3 in March to 56.2 in April. The Dallas Fed Mfg Index plunged from 10.8 in March all the way into negative territory at -3.4 in April. Construction Spending was up only 0.1% in March versus the consensus forecast of an increase of 0.5%, AND the previously reported decline of 1.1% in February was revised to a decline of 1.5%. On the positive side the national ISM Mfg Index rose to 54.8% in April from 53.4 in March.

Then yesterday, the ADP Employment Report was released and showed only 119,000 new jobs were created in the private sector in April, a major miss of the consensus forecast of 175,000, and more importantly a big decline from the average 200,000 monthly new jobs in the 1st quarter. And Factory Orders fell 1.5% in March, the biggest monthly decline in 3 years.

Meanwhile, outside of the U.S., the reports this week have been that Canada reported its GDP growth unexpectedly fell into negative territory at -1.2% in February versus forecasts of at least meager growth of +0.1%. The United Kingdom reported its PMI fell to 50.5 in April from 51.9 in March. (The U.K. had already reported negative GDP for the last two quarters, putting it officially in a recession). The 17-nation euro-zone’s PMI fell to 45.9 in April from 47.7 in March (a number below 50 indicates recessionary contraction). Even the euro-zone’s strongest economy, that of Germany, saw its PMI fall to 46.2 in April from 48.4 in March. France’s PMI remained in negative territory at 46.9.

I found this chart, which first appeared on Business Insiders, to be very interesting.

It shows how similar the current decline in Germany’s PMI is to its declines prior to the global market’s 1998 mini-crash, the 2000–2002 bear market, and the 2007-2009 bear market. 

The Dow, S&P 500, and Nasdaq have recovered all of their losses from last summer’s correction, and gone on to nominal new highs.

But not some of the broader indexes, which still remain below their peaks of last April.

And then there is that negative divergence of most of the other major economies of the world.

To read my weekend newspaper column ‘The Fed Will Come To the Rescue But Deliberately Late’ Click here.

Subscribers to Street Smart Report: A hotline from last evening, and the in-depth Mid-Week ‘U.S. Market signals and recommendations’ report are in the subscribers’ area of the Street Smart Report website from yesterday.

An early negative response to the ugly ADP jobs report and plunge in Factory Orders was reversed in the afternoon to a mixed close. The Dow, which was down 87 points in the early going recovered to close down only 11 points. Most of the rest of the major indexes recovered to close up for the day.

The Dow closed down 11 points, or 0.1%. The S&P 500 closed down 0.2%. The NYSE Composite closed down 0.5%. But the Nasdaq closed up 0.3%. The Nasdaq 100 closed up 0.3%. The Russell 2000 closed up 0.3%. The DJ Transportation Avg. closed up 0.9%. The DJ Utilities Avg closed down 0.6%.

Gold closed down $8 an ounce at $1,654 an ounce.

Oil closed down $.94 a barrel at $105.22 a barrel.

The U.S. dollar etf UUP closed up 0.3%.

The U.S. Treasury bond etf TLT closed up 0.7%.

European markets were mixed yesterday. London closed down 0.9%. Germany closed down 0.8%. France closed up 0.4%.

The DJ Asia-Pacific Index closed down 0.4%.

Japanese markets were closed for a holiday.

Among individual markets that were open:

Australia closed down 0.2%. China closed up 0.1%. Hong Kong closed down 0.3%. India closed down 0.9%. Indonesia closed up 0.1%. Malaysia closed up 0.1%. New Zealand closed down 1.1%. South Korea closed down 0.2%. Singapore closed down 0.2%. Taiwan closed down 0.2%. Thailand closed up 0.1%.

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European markets are off earlier highs but still positive this morning. The London FTSE is up 0.5%. The German DAX is up 0.4%. And France’s CAC is up 0.6%.

Oil is down $.10 a barrel at $105.06.

Gold is down $14 an ounce at $1,639.

This week is a very heavy week for potential market-moving economic reports, including the Chicago PMI, ISM Mfg Index, Factory Orders, and what I always refer to as The Big One, the Labor Department’s Monthly Employment Report. To see the full list and times for each release click here, and look at the left side of the page it takes you to.

So far the reports have mostly been a continuation of the pile-up of negative reports of recent months.

Monday it was that Consumer Spending was up 0.3% in March, slower than the 0.8% spike-up in February, while Personal Income rose to 0.4%. The Chicago PMI plunged from 63.3 in March to 56.2 in April, worse than the consensus forecast of 60.8. And the Dallas Area Fed Mfg Index, plunged from 10.8 in March all the way into negative territory, at –3.4 in April.

Outside of the U.S., Canada reported its GDP growth unexpectedly fell into negative territory at –1.2% in February versus forecasts of a meager gain of 0.1%.

Tuesday it was that Construction Spending was up only 0.1% in March versus the consensus forecast of an increase of 0.5%, and the previously reported decline of 1.1% in February was revised to a decline of 1.5%. But on the positive side, the ISM Mfg Index rose to 54.8 in April from 53.4 in March.

Outside of the U.S. on Tuesday, the United Kingdom reported its PMI Index fell to 50.5 in April from 51.9 in March. (The U.K. already reported negative GDP for the last two quarters, putting it officially in a recession). China reported its PMI Index rose from 53.1 in March to 53.3 in April, but that was below the consensus forecast of 53.5.

Yesterday there were two big negative surprises. The ADP Employment Report showed only 119,000 new jobs were created in the private sector in April, a major miss of the consensus forecast of 175,000, and more importantly a big decline from the average 200,000 monthly new jobs in the 1st quarter. And Factory Orders fell 1.5% in March, the biggest monthly decline in 3 years.

Outside of the U.S., the 17-nation euro-zone’s PMI fell to 45.9 in April from 47.7 in March (a number below 50 indicates recessionary contraction). Even the euro-zone’s strongest economy, that of Germany, saw its PMI fall to 46.2 in April from 48.4 in March. France’s PMI

The PMI reports were somewhat more favorable from Asia, at least remaining above 50. But the HSBC PMI for Taiwan fell to 51.2 in April from 54.1 in March. South Korea’s HSBC PMI fell slightly from 52.0 in March to 51.9 in April. China’s official PMI came in at 53.3, up from March’s 53.1, but missing the forecast of 53.6. India’s HSBC PMI picked up to 54.9 in April from 54.7 in March.

This morning’s reports were that new weekly unemployment claims fell a big 27,000 last week to 365,000, better than the consensus forecast. The four-week moving average moved up only fractionally, by 750 to 383,500, but that is the highest level since early December. Meanwhile, outplacement firm Challenger, Gray & Christmas reported that planned future job cuts by large corporations rose 7.1% in April, and planned job cuts are up 9.8% so far this year compared to the same period a year ago. And U.S. Productivity fell 0.5% in the 1st quarter, not as bad as the consensus forecast of a decline of 1.0% .

Still to come is the ISM non-mfg (services sector) Index, which will be released at 10 am.

The market, which was not as concerned as might be expected by the dismal economic reports so far this week, is not showing as much reaction as might be expected from this morning’s positive surprises from the unemployment claims and productivity reports.

Our pre-open indicators are pointing to the Dow being down 10 points or so in the early going, meaningless as to direction for the day.

To read my weekend newspaper column ‘The Fed Will Come To the Rescue But Deliberately Late’ Click here.

Subscribers to Street Smart Report: A hotline from last evening, and the in-depth Mid-Week ‘U.S. Market signals and recommendations’ report is in the subscribers’ area of the Street Smart Report website from yesterday.

I’ll be back with the next regular blog post on Saturday morning, as usual later than on the weekdays, probably around 11:00 a.m.

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