'Fast Money' traders talk stocks sinking on tariff worries and weak jobs data

Key Concepts:

• Market Rally & Pullback: The rapid recovery from the April sell-off and the potential for a near-term pullback.
• Catalysts: Factors driving market movement, including earnings reports, trade deals, and economic data.
• Technical Indicators: Market signals like outside reversal days and lower weeks.
• Growth Scare: Concern about a potential slowdown in economic growth.
• Nonfarm Payrolls: A key economic indicator measuring the number of jobs added or lost in the US economy, excluding farm jobs.
• Tariff Pull-Through: The effect of tariffs on economic activity, potentially pulling demand forward.
• Canary in the Coal Mine: An early warning sign of potential danger or problems.

1. Market Recovery and Potential Pullback

• The market experienced the "fastest and strongest recovery" from the April sell-off in history.
• The market has "checked all the boxes" in terms of positive performance, but few negative aspects.
• The market is "due for a little bit of a pullback."
• Technical indicators suggest a potential pullback:
  • "Outside reversal day" observed.
  • A "lower week" is occurring, unseen in several weeks.

2. Lack of Catalysts and Negative Headwinds

• "70% of the trade deals that are done," indicating a lack of further positive catalysts from this area.
• Big tech companies have reported earnings, removing another potential catalyst.
• Negative headwinds include:
  • Tariffs
  • Russia-related issues

3. Cautionary Note on Selling

• The speaker advises against selling the market, referencing the quick recovery in April.
• The market demonstrated its ability to recover rapidly, with a 10% drop in two days followed by a 9.5% increase in one day.

4. Impact of Weak Jobs Data

• The weak jobs data increases concern about a potential "growth scare."
• The previous April reversal and rally have made investors less hesitant to take profits.
• The catalysts that fueled the rally are now "off the table."
• The rally was "narrow," primarily driven by tech and tech-adjacent sectors.

5. Concerns About the Labor Market

• Divergence between ADP and nonfarm payrolls is noted.
• Revisions to the prior two months' jobs data raise additional concerns.
• The revised GDP number might reflect "tariff pull-through."
• Weakness in the labor market is seen as a "canary in the coal mine."

6. Conclusion

The market is potentially due for a pullback due to a lack of catalysts and negative headwinds. The weak jobs data amplifies concerns about a potential growth scare, making investors more cautious. The speaker advises caution against selling, given the market's history of rapid recovery, but suggests that a prudent trader would recognize the labor market weakness as an early warning sign.