A Cool Job Market, A Patient Fed

• ADP data showed business added 109,000 jobs in April.

• JOLTS numbers showed the number of workers still exceed available jobs.

• These numbers point to policy that is unlikely to change.

April didn’t bring momentum. It brought more proof the labor market is drifting sideways.…

Earlier this week, I laid out how I see the labor market taking shape. I walked through the forward‑looking indicators I track to handicap this week’s payroll report. All of them pointed to the same conclusion: April showed almost no meaningful improvement.

That’s why I expect the U.S. Bureau of Labor Statistics (“BLS”) report at the end of this week to echo that message. Even if it lands near Wall Street’s 73,000‑job forecast, that’s still well below the typical April gain of 218,000 since 2015. It would also mark one of the weakest April prints in the past decade.

April is typically one of the harder months for job seekers to find gainful employment. And yesterday’s updates from both the BLS and payroll processor ADP confirmed the trend. Job openings and hiring remain weak, which strengthens the case for the Federal Reserve to remain on hold and helps fuel the ongoing rally in the S&P 500 Index.

But don’t take my word for it, let’s look at what the data’s telling us…

The BLS Job Openings and Labor Turnover Survey (“JOLTS”) data for March showed the number of available employment opportunities fell to 6.8 million from 6.9 million in February. That’s a drop of about 6.5 million from the March 2022 peak…

However, what’s even more important is when we compare that data to the number of unemployed people. By observing that ratio, we can get a sense of whether the job market is tightening or loosening. If it’s tightening, that means employees are harder to find, driving up wages. But if it’s loosening, more people are seeking work, keeping a lid on pay.

In March, there were just over 7.2 million individuals without gainful employment. That means there are roughly 0.9 jobs available for each individual seeking work. The ratio has been around this level for the last nine months and is back in-line with pre-COVID numbers…

Employee turnover appears to be happening less frequently. The quits rate held steady at 2%, hovering around one of its lowest levels outside of the pandemic…

At the same time, ADP released its monthly hiring data for April. According to its estimates, companies brought on 109,000 new workers last month. That was an improvement compared to the gain of 61,000 in March. However, it’s far below the typical April gain of 171,000 since 2011. And it marks the fourth consecutive month of below-average hiring…

These signals matter because they shape how the Federal Reserve responds. Policymakers, including Chair Jerome Powell, have argued that last year’s restraint on rate cuts gives them room to ride out the current inflation bump. They’re willing to wait and see whether the recent jump in oil prices proves temporary. And if the U.S. and Iran can return to the negotiating table, crude could easily drift back toward pre‑conflict levels.

Bottom line: if Friday’s BLS report lines up with the trends already in motion, Wall Street will likely grow more confident that rates stay unchanged for now, with the potential for a cut by the end of 2026 and more in 2027. Lower rates next year should help reduce borrowing costs, free up cash, and support economic growth. That should continue to support a steady, long‑term rally in the S&P 500.

Five Stories Moving the Market:

The U.S. and Iran are working with mediators on a one-page framework to restart negotiations aimed at ending the conflict and opening the Strait of Hormuz, with talks potentially beginning next week in Islamabad – WSJ. (Why you should care – the White House said Iran has agreed not to pursue a nuclear weapon)

Arm Holdings warned of sluggishness in the low-end smartphone market, crimping a vital source of the chip company’s revenue, while promising that AI data center growth would more than offset the slump; quarterly royalties of $671 million came up short of the $693 million consensus estimate – Bloomberg. (Why you should care – revenue guidance for next quarter was slightly ahead of expectations, reflecting increased data center business)

France deployed its carrier strike ​group to the Red Sea as part of planning for a potential mission to secure the Strait of Hormuz, urging Washington ‌and Tehran to consider the current peace proposal given the global economic impact of their competing blockades – Reuters. (Why you should care – France and 40 other nations have said they would form a coalition to ensure ships can pass through the Strait of Hormuz without harassment)

U.S. exports of oil products rose to a record high last week as the nation continues to help make up for disruptions to fuel supplies sparked by the Iran war; the U.S. has become a lifeline for global economies as the near closure of the Strait of Hormuz throttles Middle Eastern supplies of oil and fuels – Bloomberg. (Why you should care – the relative stability of U.S.-based exports should act as a tailwind for the domestic energy industry moving forward) 

PJM Interconnection, the largest U.S. power grid operator, said it’s considering market changes that could reshape how electricity is bought and sold across its system; PJM has warned of an electricity shortfall as early as 2027 due to a lack of new supply – Reuters. (Why you should care – the power grid operator is considering separate energy markets to better protect consumers from increasing business demand)

Economic Calendar:

Earnings: CRWV, DDOG, GILD, GWW, LNG, MCD, MCHP, MCK, MELI, MNST, MSI, NET, RSG, WPM

Japan – BOJ Meeting Minutes

Australia – Exports, Imports for March

Germany – Factory Orders for March (2:00 a.m.)

France – Exports, Imports for March (2:45 a.m.)

ECB’s De Guindos (Vice President) Speaks (3:15 a.m.)

Riksbank (Sweden) Monetary Policy Announcement (3:30 a.m.)

Norges Bank (Norway) Monetary Policy Announcement (4:00 a.m.)

ECB’s Lane (Chief Economist) Speaks (4:00 a.m.)

Eurozone – Retail Sales for March (5:00 a.m.)

U.S. – Challenger Job Cuts for April (7:30 a.m.)

U.S. - Initial Jobless Claims (8:30 a.m.)

U.S. - Continuing Claims (8:30 a.m.)

ECB’s Lane (Chief Economist) Speaks (8:40 a.m.)

U.S. – NY Fed Consumer Inflation Expectations for April (11:00 a.m.)

U.S. – 4-Week Bill Auction (11:30 a.m.)U.S. – 8-Week Bill Auction (11:30 a.m.)

ECB’s Schnabel (Board Member) Speaks (1:00 p.m.)

U.S. – Consumer Credit for March (3:00 p.m.)

Fed’s Williams (New York, Voter) Speaks (3:30 p.m.)

Fed's Balance Sheet Update (4:30 p.m.)