MarketView for April 2

Summary

The S&P 500 closed at another record high on Wednesday as signs of steady private-sector hiring suggested that the economy was slowly building momentum after a winter-related pullback. That also put more focus on Friday's government jobs data, which is among the most widely watched economic indicators.

The jobs report is expected to show that employers added 200,000 to nonfarm payrolls in March, the largest gain in four months, according to a Reuters’ poll of economists.

Eight of 10 S&P 500 sector indexes ended in positive territory, led by the consumer discretionary sector, up 0.7 percent.

Wednesday's data from payrolls processor ADP indicated that private-sector employers added 191,000 workers in March, slightly below the 195,000 forecast, while gains in the previous month were revised to 178,000 from a previously reported 139,000, signaling that a winter-related impact on job growth earlier this year was easing.

The Commerce Department reported on Wednesday that orders for long-lasting manufactured goods rose 1.6 percent in February, the largest increase since September and above a 1.2 percent estimate. January's durable goods orders were revised to show a larger decline of 1.0 percent instead of the previously reported decline of 0.7 percent.

Shares of MannKind closed up 73.9 percent to end the day at $6.99. U.S. health advisers recommended approval of the company's inhaled diabetes drug on Tuesday.

Among the day's decliners, fertilizer company Agrium said a late start to spring and railroad-related backlogs will result in first-quarter earnings per share just above breakeven. Its shares lost 1.4 percent, closing at  to $96.15.

In another weather-related announcement, Delta Air Lines (said flight cancellations reduced its March quarter earnings number by $55 million. Its shares ended the day down 0.1 percent to close at $35.70.

Apollo Education fell 8.8 percent to $32.06. The company reported lower-than-expected quarterly revenue. Apollo also said it had received a subpoena from the U.S. Department of Education's Office of Inspector General, seeking information about the operations of the Northeast region of the University of Phoenix.

DFC Global gained 5.2 percent to end the day at $9.45. The pawn and payday lender said it would be acquired by private equity firm Lone Star Funds for about $1.3 billion, including debt.

About 6.2 billion shares changed hands on the major equity exchanges, slightly below the 6.5 billion average share exchange so far this month, according to data from BATS Global Markets.

Hiring Expands

Corporate hiring expanded during March for the second consecutive month, offering fresh evidence the economy is regaining momentum after a weather-driven downturn.

Employers added 191,000 workers to payrolls last month and 39,000 more were added in February than previously believed, payrolls processor ADP said on Wednesday.

The signs of solid hiring added to a steady stream of fairly upbeat data that suggests the economy started to accelerate as the grip of an unusually cold winter began to loosen and helps keep hopes alive that the economy's performance in 2014 will be its best since the recession ended almost five years ago.

The report, which is jointly developed with Moody's Analytics, was released ahead of the government's more comprehensive report on employment on Friday. That report is expected to show nonfarm payrolls rose by 200,000 in March, the largest gain in four months, according to Reuters. The poll was taken before the ADP data was released, but many economists said the ADP report did not shift their views.

A separate report showed small business hiring increased for a sixth straight month in March. The National Federation of Independent Business said small business employment increased by an average of 0.18 workers per firm, up from 0.11 in February.

Signs of improvement in the labor market will be welcomed by the Federal Reserve, which has been scaling back its monthly bond-buying program in a vote of confidence in the economy. At the same time, the show of labor market strength could heighten speculation on the timing of the U.S. central bank's first interest rate increase. It has held benchmark overnight lending rates at a record low of zero to 0.25 percent since December 2008.

The unusually cold and snowy winter was just one factor that hobbled the economy at the end of 2013 and the start of this year. Growth also took a knock from businesses placing fewer orders with manufacturers while working through a pile of unsold goods, and from the temporary drag from the expiration of long-term unemployment benefits and cuts to food stamps. These factors are expected to lower growth to an annualized pace below 2 percent in the first quarter. The economy expanded at a 2.6 percent rate in the last three months of 2013.

Signs of an economic thaw were also evident in a separate report from the Commerce Department that showed new orders for manufactured goods jumped 1.6 percent in February, the biggest rise since September. However, January's orders were revised to show a larger 1.0 percent drop from a previously reported 0.7 percent fall.

Inventories at factories rose 0.7 percent in February, the biggest increase since October 2011. Bullard said that was likely because other businesses were holding the line on their inventory, leaving a buildup at factories.

In another upbeat economic sign, shipments from factories increased 0.9 percent, the largest rise since last July.

Moody’s Sees 3 Percent Economic Growth

Solid company hiring in March signaled the economy is back on track to expand at a 3 percent clip in 2014 after a slow start hampered by harsh winter weather, Moody's Analytics chief economist Mark Zandi said on Wednesday.

Private employers added 191,000 workers last month, slightly below economists' expectations, but gains for February were revised higher by almost 40,000, the ADP National Employment Report released earlier showed. The report is jointly developed with Moody's Analytics.

The March ADP jobs reading was "very consistent with the growth we'd seen prior to the winter," Zandi said to reporters during a conference call after the ADP report. He expected private-sector job growth to run at a 200,000 monthly pace in the spring and summer with a month or two possibly running as high as 250,000.

Based on the latest ADP figures, Zandi said the government's jobs reading will likely show an increase of 185,000 which would likely indicate a 5,000-6,000 reduction in government jobs. The jobless rate, which the Federal Reserve has been monitoring closely, will likely dip to 6.6 percent from 6.7 percent, he said.

If job growth resumes at its pre-winter pace, the U.S. economy might achieve full employment at end of 2016 or early 2017, Zandi said.