Job Market Worries Begin to Form

The jobs market is in focus this week with more key data on the way. The Daily Breakdown digs in — and looks at possible support for CRWD.

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What’s Happening?

Yesterday’s JOLTS report — which measures job openings, quits, and layoffs — was underwhelming. Job openings fell from the prior month and missed expectations, while layoffs increased and came in higher than expected.

Furthermore, the number of unemployed job seekers rose to 7.24 million, exceeding the 7.18 million job openings. This marks the first time in four years that the number of unemployed individuals has surpassed the number of job openings.

Looking Ahead

Today brings the weekly jobless claims report, which will show how many people filed for unemployment. This is considered a leading labor market indicator — but so far, it hasn’t shown a worrisome spike in unemployment.

Friday’s monthly jobs report is much more important. Expectations are quite low, with economists estimating that just 75K jobs were added last month — for context, the US averaged 186K new jobs per month in 2024. The unemployment rate is expected to tick up from 4.2% to 4.3%.

Final Thoughts

The labor market is tough to explain right now. On one hand, it hasn’t fallen apart, and I wouldn’t call it weak or fragile. But it has clearly softened over the past few months and become more vulnerable. Bulls should use this week to seek clarity in the job market. While a weaker labor market may lead to lower rates from the Fed, investors should be cautious about cheering for significant weakness purely for the sake of monetary easing.

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The Setup — Crowdstrike

Some may remember Crowdstrike as the firm that caused a major global outage last summer. Others remember it as the stock that caused a major outage, fell ~50% in less than a month, then more than doubled a few months later. Since then though, CRWD has remained a volatile stock — even its most recent earnings reaction has been all over the map. 

Notice how Crowdstrike initially opened lower after reporting earnings, soared higher, then gave up those gains? Bulls are keeping a very close eye on this $400 to $415 zone. For now, this area is acting as support, along with the 200-day moving average. Short term investors may find the decline attractive, but only if this area remains support moving forward. If it does, a larger bounce could ensue. However, failure to act as support could usher in more selling pressure. 

On a dip, buying calls or call spreads may be one way to take advantage of support holding. However, puts or put spreads could be one way to take advantage of a further pullback. To learn more about options, consider visiting the eToro Academy.

What Wall Street’s Watching

CRM

Shares of Salesforce are tumbling this morning, down about 7% in pre-market trading after reporting earnings. The company beat on earnings and revenue expectations and boosted its buyback by $20 billion. However, management’s outlook for next quarter was slightly below analysts’ expectations. Dig into the fundamentals for CRM. 

AEO

American Eagle is the opposite vibe this morning, rising more than 20% after the retailer beat on earnings and revenue expectations. “[With] the success of recent marketing campaigns with Sydney Sweeney and Travis Kelce, we have seen an uptick in customer awareness, engagement and comparable sales,” said CEO Jay Schottenstein. 

AVGO

Quietly commanding a $1.4 trillion market cap, Broadcom will report earnings tonight. Analysts currently expect earnings of $1.66 a share and revenue of $15.8 billion. The firm will report along with a few other notable companies, one of which is Lululemon Athletica. Check out the chart for AVGO.

Disclaimer:

Please note that due to market volatility, some of the prices may have already been reached and scenarios played out.