The major indices are all trading lower through the middle of the trading session despite a better than expected jobs report from the Bureau of Labor Statistics this morning.
The economy added 295,000 jobs in February, sending the unemployment rate to 5.5%; but the market doesn’t seem to care very much.
RBS Chief Economist Michelle Girard notes that, based on the way the BLS gathers jobs data, the February number managed to avoid any impact of wild winter weather. “It was a very solid report,” she says, “of course the thing we’re still not getting is wage growth.”
Even without stellar wage growth, Yahoo Finance Editor-in-Chief Andy Serwer would like to officially proclaim the Great Recession over. “The unemployment rate is now at 5.5%. That’s the lowest since may of 2008 when it was 5.4%. It’s been a long time coming.”
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Still hung up on wage growth? Girard notes that while the data may not show the kind of growth the talking heads want to see, the headlines do. “[Wage growth is] out there. I just think it might be a matter of a couple of months until it shows up in some of these reported statistics.” The solid top line number in today’s report sent the dollar higher, to levels not seen in more than eleven years. That’s great news for U.S. travelers heading abroad this summer but could be a drag on the U.S. economy. “I’m not so worried about the direct impact on exports,” Girard says, “as I am about the indirect impact that it may have on company earnings.”
As Yahoo Finance’s Aaron Task says, “The charlatans who told us the dollar was going to become toilet paper… they’re still waiting for the apocalypse.” In the time they have been hawking the dollar’s demise, Task notes, they’ve missed six years of rally.
Apple joins the Dow
Apple (AAPL) investors are driving the stock higher on a down day thanks to news that the Cupertino computer giant will take the place of AT&T (T) on the Dow Industrial Average (^DJI) effective after trading on March 18th.
If past is prologue (caution: it often isn’t when it comes to the market) Apple’s luster may soon fade. A study by economists at Pomona College found that of the 50 Dow changes between 1928 and 2005 the ousted stock outperformed the added stock 32 times. Over the first 250 trading days of such changes, the stocks no longer in the Dow rose 19% while those that were admitted to the index rose just 3%.
The week ahead
Every Friday we ask our panel what they’ll be watching next week.
Jen Rogers: The Apple Watch
Michelle Girard: Retail sales
Andy Serwer: The end of winter?
Aaron Task: Europe
You can read their thoughts on those potential market movers here!
