Today's big jobs report was disappointing across the board. Still, stocks exhibited remarkable resilience even while trading near all-time highs.
First, the scoreboard:
- Dow: 15,658.3, +30.3, +0.1 %
- S&P 500: 1,709.6, +2.8, +0.1%
- NASDAQ: 3,689.5, +13.8, +0.3%
And now, the top stories:
- The Dow was down by around 70 points in early trading. But the markets managed to recover all of its losses and close in the green.
- U.S. companies added just 162,000 jobs in July, which was much less than the 185,000 expected by economists. Also, the June number was revised down to 188,000 from an earlier reading of 195,000. The labor force participation rate fell to 63.4% from 63.5%, which contributed to the unemployment rate falling to 7.4%.
- Most of the jobs created were part-time. Since May, part-time jobs have climbed while full-time jobs fell. On a related note, average hourly wages actually fell 0.1% month-over-month, and they climbed by just 1.9% year-over-year.
- "The July employment report was on balance disappointing, as payroll jobs, income, and hours grew less than expected, and the larger-than-expected decline in the unemployment rate was partly due to declining participation," said Goldman Sachs' Jan Hatzius. "There continued to be little if any discernible sequester impact on federal jobs as federal ex-postal service employment was essentially unchanged on the month. However, there was a bit more weakness in private industries likely to be impacted by the sequester, including non-auto transportation equipment manufacturing―which incorporates aerospace and shipbuilding―down 7k."
- Sure, the numbers were worst than expected. But in the big scheme of things, they weren't exactly a disaster. "These data are "Goldilocks"—Not too hot, not too cold...just about right," said UBS's Maury Harris. "All in, today’s data are probably soft enough for markets to think about delayed Fed tapering (We still expect announcement of Q4 taper announced at the September FOMC meeting.), but not so soft as to generate much real economic worry."
- Regardless, the numbers continue to reflect a jobs market that's anemic at best. "While the two political parties are putting a different spin on the latest job report, they should both internalize a simple message: the economy is not strong enough to absorb another self-manufactured blow from Congress – be it a renewed debt ceiling saga or a government shutdown," said PIMCO's Mohamed El-Erian.
- In a separate report, we learned that personal income climbed by just 0.3% in June, while spending increased by 0.5%.
- Just after noon today, St. Louis Fed President James Bullard spoke and gave a presentation at the Municipal Finance Conference in Boston, Massachusetts. "Should the Committee focus attention primarily on nonfarm payrolls and unemployment, or should the Committee consider a wider range of labor market indicators?" asked Bullard. "If the former, then labor markets have clearly improved since September 2012. If the latter, then labor markets may be judged to remain weak, but the criterion for labor market improvement would be considerably muddied."
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