The SPDR S&P 500 ETF Trust (NYSE: SPY) was trading lower by another 2.1% on Friday morning despite a better-than-expected August jobs report from the Department of Labor.
The U.S. economy added 1.37 million jobs in August, topping consensus economist estimates of 1.32 million. In addition, the U.S. unemployment rate dropped from 10.2% in July to just 8.4% in August, beating expectations of 9.8%.
The so-called “real” unemployment rate, which factors in those who are out of the workforce and those who are underemployed, fell by 3.3% to 14.2%.
Several analysts and experts have weighed in on Friday’s jobs report.
Resilient Economy: Investors should see the report as a positive despite the continued sell-off in tech stocks on Friday, said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
“Look for the bull market to continue amidst some sector rotation as people take profits in technology names and put more money to work in more cyclical parts of the market such as in the Energy, Materials and Financials sectors,” the CIO said.
Ryan Detrick, LPL Financial's chief market strategist, said the latest jobs report once again demonstrates the resiliency of the U.S. economy.
“But 8% unemployment is still 8% unemployment, so let’s not get too excited, but we’ll still take this improving trend in the employment picture,” he said.
Job Growth Already Slowing: The easy part of the economic rebound may now be over, said Jamie Cox, managing partner for Harris Financial Group.
"Now the real work begins" in generating the next the next 2% to 3% in unemployment gains, he said.
“PPP funds are running dry and the impasse in Congress to reauthorize another round for struggling small businesses most affected by the pandemic are recipes for a wave of small business closures, particularly among restaurants and small retailers,” Cox said.
Charlie Ripley, senior investment strategist for Allianz Investment Management, said temporary government jobs accounted for 238,000 of the new ones in August, and the pace of job growth already appears to be slowing.
“Today’s report is another sign that the recovery in the labor market is nearing the point of exhaustion and should signal to lawmakers that another round of fiscal stimulus will be needed to keep the economic recovery on track,” Ripley said.
Benzinga’s Take: Investors may be somewhat confused about why the stock market is so weak on Friday following a relatively impressive jobs report.
It’s important to keep in mind that much of the market’s strong rally off its March lows to new all-time highs has already priced in a strong U.S. economic recovery, potentially skewing near-term risk to the downside.
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