Disappointing Jobs Report Has No Impact On Stocks

Friday’s release of a downbeat non-farm payrolls report had no impact on stocks, sparking a diverse batch of theories about the market’s reaction.  

Stocks generally made moderate advances on Friday, although the Dow took a 7-point dip, after the Bureau of Labor Statistics released its non-farm payrolls report for December. Although economists had been expecting to see that 200,000 non-farm payroll jobs were added during December, the report indicated that only 74,000 jobs were added. The unemployment rate declined from 7.0 percent to 6.7 percent. On the other hand, the labor force participation rate fell to its lowest level since 1978, declining to 62.8 percent from November’s 63 percent.
 
Many commentators expressed the opinion that investors simply brushed-off the data as resulting from bad weather or seasonal volatility. Others immediately latched onto the notion that investors were excited about the possibility that the Federal Reserve would restrain the taper of its monthly bond purchases. Occam’s razor would seem to favor an explanation based on the idea that since the recession is now over, with the economy slowly expanding after the Fed has already initiated the taper … the non-farm payrolls report is just not as important to investors has it had been since 2008.
 
The Dow Jones Industrial Average (DIA) lost 7 points to finish Friday’s trading session at 16,437 for a 0.05 percent dip. The S&P 500 (SPY) rose 0.23 percent to finish at 1,842.
 
The Nasdaq 100 (QQQ) advanced 0.35 percent to finish at 3,565. The Russell 2000 (IWM) climbed 0.53 percent to end the day at 1,164.
 
In other major markets, oil (USO) advanced 0.24 percent to close at $33.19.
 
On London’s ICE Futures Europe Exchange, March futures for Brent crude oil advanced 87 cents (0.82 percent) to $106.83/bbl. (BNO).
 
February gold futures advanced $19.0 (1.55 percent) to $1,248.50 per ounce (GLD).
 
Transports continued their voyage to Alpha Centauri on Friday, as the Dow Jones Transportation Average accelerated 1.26 percent, sending the iShares Dow Jones Transportation Index ETF (IYT) to a record-high close of $132.77 after reaching a record intraday high of $133.79.
 
In Japan, better-than-expected earnings reports from the retail sector gave stocks a modest boost. The Nikkei 225 Stock Average advanced 0.20 percent to 15,912 (EWJ).
 
Stocks declined in China as concerns about the revival of the nation’s IPO trading caused declines in the industrial and technology sectors. The Shanghai Composite Index fell 0.71 percent to 2,013 (FXI). Hong Kong’s Hang Seng Index advanced 0.26 percent to 22,846 (EWH).
 
In Europe, stocks were making a nice advance until the release of the disappointing non-farm payrolls report from America’s Bureau of Labor Statistics caused a nosedive, which was followed by an immediate recovery. Nevertheless, stocks faded during the final two hours of the session, as European investors remained concerned as to whether the downbeat economic news might signal reduced demand for European exports to the United States. Despite the afternoon retreat, the Euro STOXX 50 Index managed to advance 0.45 percent to 3,104 on Friday – climbing further above its 50-day moving average of 3,042. Its Relative Strength Index is 58.86 (FEZ).
 
Technical indicators revealed that the S&P 500 rose further above its 50-day moving average of 1,800 after advancing 0.23 percent to finish Friday’s trading session at 1,842. Its Relative Strength Index rose from 62.25 to 64.03. The MACD is heading back up to the signal line, which would suggest that the S&P could continue its advance during the immediate future.

On Friday, all sectors advanced except for the financial sector, which declined 0.18 percent.
 
Consumer Discretionary (XLY):  +0.30%
 
Technology:  (XLK):  +0.20%
 
Industrials (XLI):  +0.15%
 
Materials: (XLB):  +0.31%
 
Energy (XLE):  +0.08%
 
Financials: (XLF):  -0.18%
 
Utilities (XLU):  +1.43%
 
Health Care: (XLV):  +0.39%
 
Consumer Staples (XLP):  +0.14%
 
Bottom line:  Although the Dow took a 7-point dip on Friday, the other major stock indices made moderate advances, despite a disappointing non-farm payrolls report for December.

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