Friends
Before we talk about what stocks did in the aftermath of today’s jobs report, let’s first go over the report. 160,000 new jobs were created in April as measured by the government, which was quite a bit less than most analysts had expected. The unemployment rate remained at 5%, but the participation rate did fall again after improving recently. The only slight “positive” from today report might have been the improvement in the average hourly wage number, which was up .30% and a little better than expected. Year over year, wages have improved by 2.5%. That again, was a little better than expected and may be a silver lining in what was a dim report. Of course, if you happen to worry about inflation, you might be slightly concerned about the rise in wages, but I would caution that is has been modest and gradual, and quite frankly what the Fed has desired.
As for stocks, it appeared that traders weren’t sure what to do with the jobs number. Does this mean the Fed is on hold for longer, ruling out June altogether? Will we ever see interest rates rise again in our lifetime? Well, stocks sold off early then recovered. Again, the mixed feelings about how to interpret this report and other recent weak economic data – is the Fed on hold forever- is causing confusion with regards to near term prospects for stocks.
As for today, by the close the Dow Jones Industrial Average was up 79 to finish the day at 17,740. The S&P 500 was up 6 points to close at 2057. Gold was up $18 to trade at $1290 per ounce, while oil was up $.23 to trade at $44.55 per barrel WTI.
As usual lately, the economic outlook is mixed and thus markets appear to be stalled. Will the weakness turn into something more significant over the summer? We will see. Corporate earnings are challenged, thus valuations are susceptible, but will the specter of easy monetary policy once again be enough fuel for stock market gains? Stay tuned.
Have a great weekend everyone.
