Stocks initially got hit on Friday following the monthly employment data. S&P 500 (NYSEARCA:SPY) futures tumbled by more than 20 points, a full percent, immediately following the data.
But, as was the pattern all week, stocks largely recovered from the soft beginning, closing with modest losses on the day. The S&P closed off just 6 points, and the Dow (NYSEARCA:DIA) had a similarly small loss. The Nasdaq (NASDAQ:QQQ) by contrast had a much bigger decline, down 0.6% on the day.
At fault for the selling was a really weak jobs report. The economy created fewer than 50,000 net new jobs, way short of expectations. Revisions to previous months’ data were also sharply to the downside.
I’d suggest that this jobs report isn’t quite as big a portent of immediate problems as some people are making it out to be. For one thing, the report was particularly bad due to almost 40,000 Verizon (NYSE:VZ) employees being on strike and thus shown as having lost their jobs. They will be re-added to the tally in future months.
In the broader picture, it’s important to remember that the jobs report is a noisy piece of data, it is known for broad fluctuations. While it’s extremely important as an indicator over longer spans, the month-to-month fluctuations can be severely misleading if overanalyzed.
My call has been and remains slowing economic growth in 2016 – think sub-1% GDP growth, and good odds of a recession in 2017. Minimal job growth, though not outright contraction, supports the idea that the economy’s growth is slowing but hasn’t tipped over into shrinkage.
The market reacted to the jobs report in a surprisingly abrupt manner, concluding that any possibility of rate hikes in 2016 has basically disappeared. I disagree with this assessment. The Fed has proven to be stock market dependent, rather than data dependent, in making decisions about raising rates or leaving them unchanged.
Source : http://seekingalpha.com/article/3979957-u-s-airlines-heading-south-fed-hikes-questioned-bezeks-daily-briefing
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