Weekly Update 4/2/2026: Markets Close Month on Positive Note
- Sysco makes strategic acquisition
- Employment report released tomorrow
- Retail sales rise
Geopolitics
The market continues to focus on events in the Middle East. After news of possible negotiations between the U.S. and Iran hit the headlines, stocks rocketed higher on Tuesday helping end the month of March on a positive note with many of the major averages registering nearly a 3% gain on the day. Overall, last month was not a positive one as surging commodity prices have hit the global economy hard. Last night, President Trump gave a speech about the war in which he pledged that the U.S.-Israeli alliance would carry out further operations against Iran “over the next two to three weeks.” In early trading today, markets interpreted those comments to mean that oil prices might continue their rise. That suggests that the threat of inflation would continue to hover over markets and possibly prevent the Federal Reserve, which meets on April 29, from lowering its benchmark rate further. The federal funds target has been on hold in the 3.50%-3.75% range since December of last year.
Year-to-date, the price of crude traded on the Intercontinental Exchange has risen close to 80%. Natural gas on that bourse has risen by about the same amount. There are about 298 million registered cars on the road in the U.S. punctuating the importance of oil. And natural gas is the largest source of electricity in the U.S., used to generate approximately 43% of the nation’s power in 2024. While the U.S. is a net exporter of both oil and natural gas, domestic market prices for oil has also sharply risen over the past month. The Fed’s preferred measure of inflation, the personal consumption expenditure index, will not be released until April 9 and that will only tabulate February’s data which is unlikely to include any of the recent price spikes since the attacks began on the last day of that month. There is plenty of evidence though that consumers are bearing the brunt of the conflict with the national average price of a gallon of gasoline above $4.
Because of the way data is collected, we are unlikely to see these inflationary pressures in monthly government figures until later in April or May. By that time, the conflict may even be over. That is why Fed Chairman Jerome Powell has commented that officials often “look through” these price spikes because they are often relatively short in duration. However, policy makers will have to decide if their worst fears are coming true—that is, inflationary expectations become embedded in future decisions. Once those thoughts become anchored, they are hard to dislodge, which is why the Fed has fought so hard since 2022 for that not to happen. Once they become affixed, they seep into contract negotiations, supply chains and more and more areas leading to a decline in the purchasing power of the dollar. The futures market is no longer pricing in any interest rate cuts by the Fed in 2026 or 2027. Nearing the one year anniversary of “Liberation Day” tariffs, the constant battles the Fed has to fight on this front may eventually take its toll on the psychology of the American consumer. Stay tuned.
Economic Data
There were a handful of notable data releases this week, but the biggest one of all will take place with the markets closed. The Bureau of Labor Statistics released its Jobs Openings and Labor Turnover Survey (JOLTS) this week, which showed that openings fell and hiring slowed in February. Vacancies fell to 6.88 million from an upwardly revised 7.24 million in January. This suggests that companies are becoming more cautious after a year of near-zero job growth. The survey was taken before the Middle East war began at the end of February, which could mean that firms became even more conservative in an effort to keep a lid on operating costs.
The hiring rate fell to the lowest level since April 2020 thanks primarily to declines in leisure & hospitality and construction, which was likely affected by severe winter weather. Business and professional services hiring also dropped. “Continued declines in job openings and hiring affirm that employers remain cautious about expanding headcount based on what they know, such as rising costs of business, and what they don’t know, especially due to policy uncertainties as well as geopolitical tensions,” Noah Yosif, chief economist at the American Staffing Association, said in a note. The ratio of vacancies per unemployed worker fell to 0.9x in January. That is a far cry from the 2-to-1 ratio prevalent in early 2022. The so-called quits rate, which measures the percentage of individuals who voluntarily leave their jobs, dropped to 1.9%. That matched the lowest level since 2020 when the pandemic was raging from coast to coast. Today the Labor department reported that applications for unemployment benefits fell to one of the lowest levels in the last two years. This suggest that layoffs remain low and emphasizes the current “low hire, low fire” environment for the labor market.
The next monthly payrolls report will come out tomorrow. The Labor Department decided to stick to its schedule of releasing the report on the first Friday of the month even though it coincided with the observance of Good Friday. While markets are closed, it is not a federal holiday. In a survey of economists by Bloomberg, the payroll report for March is expected to show growth of 65,000 positions, a reversal of the 92,000 contraction in February. The unemployment rate is expected to stay constant at 4.4%. Average hourly earnings, a key inflation component, is expected to rise 3.7% year-over-year, a slight decline from the 3.8% rate seen in February. Investors will also be focused on the participation rate to see if the downward trend in that metric continues, suggesting frustration among job seekers. Private payrolls are also expected to rebound in March to positive figures from a negative tally the prior month. Stay tuned. Markets on Monday may be extra volatile at the opening as traders “catch up” to the data released tomorrow while they were away from their desks.
One piece of economic good news arrived this week when the Commerce Department reported that retail sales rose 0.6% after a slight decline in January. Excluding autos and gas, sales rose 0.4%, the most since August. Ten out of 13 categories reported increases. Personal care, clothing and sporting goods were three of the better areas. A rise in receipts at gas stations likely reflected an increase in the price of fuel rather than rising demand, as the figures are not adjusted for inflation. Rising refunds also helped and paint a picture of a resilient consumer even in the face of economic headwinds.
Company Events
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