Friends
What’s the deal? I leave town for a couple of days and the market goes up 1000 Dow points (no clever remarks on how maybe I should just stay away). Unfortunately, the stock market’s remarkable 8-day run seems to have been doused, temporarily, by this morning’s awful employment number. I just hate when reality comes back into the picture. The simple fact is that we are just not creating enough jobs in this country, for whatever reason. The politicians from both sides of the aisle will surely let us know what the problem is as the day goes on, but suffice it to say we need to create more jobs.
As for the market, despite this morning’s set back, stocks have had an historic two weeks, as the bears and underinvested bulls have been caught off guard. With QE2 ending, Greece imploding and the debt ceiling fiasco unfolding, it made sense to play a little defense as a long summer loomed (we felt it was prudent also), but as stocks began to rally early last week, the bears were forced to react. As the S&P 500 crossed through resistance at 1300, even underinvested fund managers had to put money to work and the S&P soared to over 1350 as of yesterday. Now, the employment number just released this morning will provide a headwind for stocks and a little economic reality to the equation, but we will be interested to see if stocks can continue to shake off news of all types and continue to rise. “Sell in May and go away” looked to be pretty brilliant until the last two weeks, didn’t it?
In all fairness, other economic numbers this week have been encouraging. We have been curious whether May’s economic numbers (released in June) were signs of a renewed slowdown or just temporary. So far, until today’s employment number, June’s economic data (being released in July) has indicated that, indeed, the slowdown may only have been temporary.
We’ll continue to monitor the market’s reaction to the jobs number and the debt ceiling news out of Washington. Will the market continue to punish those who sold in May and went away? Will the game of chicken in Washington overwhelm the good feelings about recent market activity? Remember, earnings season starts next week which should help give us some clarity as to what corporate America has been up to, and what executives are feeling about the second half of the year.
Have a nice weekend everyone.
