Stocks today traded in a narrow range ahead of tomorrow’s release of the February jobs report. Banks did well while energy related stocks were lower. At the close the Dow was up 2 points to 20,858. Trading volume was up slightly from the prior day’s session.
The latest jobs report was a blockbuster. Telsa would call it “Ludacris Mode” or, as we in Ballard would say, “Lutefisk mode”. ADP said private payrolls increased by 298,000 in February, the biggest number in 3 years and 100K above consensus. If this data holds true for tomorrow’s labor report then the chances of a Fed rate hike next week go from “likely” to “almost guaranteed”. Currently, the odds makers have the probability of a rate hike at 90%. 10 year US Treasury yields have risen to 2.6% so far in March.
Oil prices fell 5% yesterday and today continued the decline finishing near $49.22 per barrel off 2%. The cause of the “Texas T retreat” was a US oil stockpile report showing crude stocks surged to 528.4 million barrels hitting an all-time high. The 8.2 million barrel increase was well above estimates and US stockpiles have grown about 50 million barrels since OPEC’s production cut. In another interesting oil related news item, IBD reported that Royal Dutch Shell CEO Ben van Beurden told a packed house at the IHS' CERAWeek energy conference in Houston that peak oil demand could occur in the next 10 years thanks to a sharp rise in both renewable energy production and the use of natural gas. When Ben made this statement, OPEC officials quickly poo-pooed it as a bunch of dangerous loose talk. This is very interesting! I have never heard of “peak oil demand” before but it makes sense. I wonder what Elon Musk would say.