Friends
The bulls were merrily celebrating a tepid jobs number earlier today before the rug got pulled out from under them. 187,000 new jobs were created in July vs. about 200,000 expected. The unemployment rate fell to 3.5% while average hourly earnings were slightly better than expected. By mid-morning with the Dow sporting a couple hundred-point gain, the term “goldilocks’ jobs number was being bandied about on the business news channels. After rising all week, interest rates on all maturities did fall after the jobs report. That would often fuel a stock market rally, and for a while it did, but alas, by the close the bears were celebrating a week in which they finally had the upper hand.
For the day, the Dow Jones Industrial Average was down 150 points to close at 35,065. The S&P 500 was down 23 points to close at 4,478. The Nasdaq Composite Index was down 50 points to close at 13,909. Gold was up $8 to trade at $1,976 per ounce, while oil was up $1.06 to trade at $82.61 per barrel WTI.
As we mentioned earlier this week, stocks were extended and priced rather expensively as we entered this earnings season. Despite good earnings many stocks were simply priced for perfection. Apple is a good example. Up massively for the year, even good earnings couldn’t support current levels. Amazon on the other hand had trailed other big growth winners this year so it was handsomely rewarded today after yesterday afternoon’s earnings release. Today’s reversal illustrates once again that the bulls seem to be running out of gas in the short run. And seasonally the coming 60 days or so are not typically great for stocks. Having said that, it’s not a surprise or necessarily a bad thing that stocks have stalled after a mighty surge in the first half of the year. We’ll be back with you next week.
Have a great weekend everyone.
