Market reaction to jobs report: Lousy

Futures markets signal a steep sell-off Monday as the Labor Department says employers added 120,000 nonfarm jobs in March, less than expected. Unemployment falls to 8.2%, as fewer people seek work. The stock market was closed for Good Friday.

By Charley Blaine Apr 6, 2012 11:43AM
Charley BlaineUpdated: 9:30 p.m. ET, Sunday

Investors' immediate reaction to Friday's jobs report: It stank.

The jobs report showed only 120,000 payroll jobs were created, the lowest gain in five months. The consensus estimate was for 205,000 job creations. While the U.S. unemployment rate fell to 8.2%, the reason was a number of  workers had stopped looking for work. The number of people employed actually fell.

Futures trading late Sunday suggested the Dow Jones industrials ($INDU) will open down 140 points or so on Monday, with the Standard & Poor's 500 Index ($INX) down 18 points and the Nasdaq-100 Index ($NDX) down some 35 points. The Russell 2000 Index ($RUT) may drop as many as 14 points. The stock market was closed Friday for Good Friday.

Interest rates moved lower after the report's release, with the 10-year Treasury yield falling to 2.061% from Thursday's 2.175%. The U.S. bond market closed at noon on Friday.

The disappointment with the report raises the possibility that the Federal Reserve may move to add more stimulus to the economy. The Fed had signaled in minutes from its March 13 meeting that it was more inclined to wait before making any moves. The Fed is on record as saying it doesn't see raising interest rates before late 2014, although many economists believe it will move sooner.

Article continues below.
Some of the report was payback for strong reports in January and February when a ridiculously warm winter in the Midwest and East cheered many consumers and retailers. Construction even showed some gains.

Weather in March was also warmer than usual, but the gains in January and February slowed.

Markets for the week



4/6/2012

3/30/2012

% chg.

YTD chg.
Dow Industrials

13,060.14

13,212.04

-1.15%

6.90%
S&P 500

1,398.08

1,408.47

-0.74%

11.17%
Nasdaq 

3,080.50

3,091.57

-0.36%

18.25%
Russell 2000

818.18

830.30

-1.46%

10.43%
Crude oil 

$103.31

$103.02

0.28%

4.53%
(per barrel)











U.S. Dollar Index 

80.09

79.14

1.20%

-0.54%
10-yr. Treasury

2.06%

2.22%

-6.99%

10.16%
Gold

$1,630.10

1,671.90

-2.50%

4.04%
Stock markets were closed Friday for Good Friday. Some futures and bond markets were open.

There were a few things to cheer about in the report. Manufacturing added some 37,000 jobs. Revisions to payrolls for January and February added a net 4,000 to the jobs picture. Average hourly earnings were up 0.2% from February. That translates into a 3.4% annualized rate.

Since nonfarm job losses bottomed in February 2010, with 8.8 million jobs lost, the economy has reclaimed 3.58 million, or 40.7%, of the 8.8 million jobs lost. Since private-sectors bottomed in January 2010, 4.05 million jobs or 45.7% of the 8.89 million jobs lost, have been recovered.

But then there were the negatives, including:
  • Private-sector employment increased by 121,000. The consensus estimate had been 215,000. Payroll processor ADP had estimated on Wednesday that private-sector jobs had grown by 209,000. 
  • Employment by temporary help services fell by 8,000. In a recovering economy, this category typically is growing ahead of permanent employment. This was the first decline since June 2011.
  • Construction payrolls fell by 7,000.
  • Retail jobs fell by 34,000.
  • Household employment was off 31,000.
  • The participation rate slipped from 63.9% to 63.8%.
  • Average weekly hours slid to 34.5 from 34.6 in February.
An alternative measure of unemployment, which includes those looking for jobs, those working part-time when they want full-time work and those who have stopped looking for work, fell to 14.5% from 14.9% in February and 15.7% in March 2011. The drop may be due to the decline in the labor force.

What the report does not say -- and probably can't -- is the impact of higher oil and gasoline prices on the economy. Gasoline averaged $3.936 a gallon Friday, according to AAA's Daily Fuel Gauge report, unchanged from Thursday but up 20.2% for the year.

Is this the end of the world?

Maybe not. "Our read is that March is understating the underlying improvement in the labor market, while January and February overstated it," wrote Nigel Gault, chief U.S. economist of IHS Global Insight.

The University of Maryland's Peter Morici argued that the report points up a number of big issues in the economy, including trade imbalances with China and the need for more domestic energy production. He also believes the economy is hampered by what he called "burdensome regulation," healthcare costs and potential mandates.

But the report does undercut one of the driving forces in this year's stock market rally that has seen the Dow rise 6.9%, the S&P 500 gain 11.2% and the Nasdaq Composite Index jump 18.3%. The Nasdaq-100 is up 21.3%, much of that gain generated by Apple (AAPL), which is up 56.5%.

Economists and no less than Federal Reserve Chairman Ben Bernanke have said they expect job growth to moderate in 2012 as overall demand in the economy remains weak, gasoline prices rise and Europe slows.

Stocks overall fell this week, with Dow off 1.2% and the S&P 500 and Nasdaq off by smaller amounts. Only six of the 30 Dow stocks finished higher on the week, led by Merck (MRK) and Home Depot (HD).

The Nasdaq-100 Index ($NDX) finished up 0.3%, led by Bed Bath & Beyond (BBBY), up 9.2%, and Apple, up 5.7%. Despite those performances, only 34 stocks in the index finished with weekly gains. Only one stock in the Philadelphia Semiconductor Index -- Spreadtrum Communications (SPRD) -- finished higher for the week, but the gain was a tiny 0.06%.
 
That helps explain why an uneasy mood took over Wall Street this week. The fear: 2012 may prove to be a repeat of 2011, where the economy started out strongly. Then it was staggered by rising oil prices, the Japanese earthquake and, later, flooding in Thailand that disrupted supplies of key electronics used in a variety of industries and, of course, bitter political battles over government finances.
29Comments
Apr 6, 2012 12:43PM
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The Government's "Unemployment Rate" is just as FICTITIOUS as it's "Inflation Rate" whcih does NOT include Food & Gas Prices - which are the 2 biggest factors in everyones economic well-being! The REAL facts are that in 2011 - MORE people filed claims for First Time Unemployment than were hired. So how does the Unemployment Rate fall from 9.1% in Aug. to 8.2% in April? It's a LIE because it doesn't take into account the first time filers (going back 4 years) whose unemployment benefits ran out and have not gotten jobs. It could also be a covert manipulation of the numbers by the party in Power. When it comes to Government propaganda - believe NOTHING that they say, and only half of what you see!   

Apr 6, 2012 12:18PM
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Only in politics is this acceptable.

120,000 Jobs created. When you start breaking down the #'s from the government you discover that a large portion (almost 100,000) of these so called jobs created every month are assumed to be business start ups. That is absurd.
Last statics I've read about new business starts are 50% fail in the first year 90% fail in first 5 years. But only with the government statistics do you get 1000% return on investment. No wonder we have a budget crisis. They couldn't get an accurate count of how many Presidents of the United States we have; much less, how much we spend where etc....

Apr 6, 2012 2:30PM
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The real issue is the EMPLOYMENT RATE not the unemployment rate!  Even though we now have a polulation of about 7 million more people in the US than 5 years ago, we have about 5 million LESS people working today.  In the last 3 years about 8 million unemployed have given up all hope of finding a job.  The amazing part is that this unemployment spiral is hitting the uneducated, poor, black, a female populations hardest -- all groups who for some stupid continue to support President Obama, even though his dangerous policies have waged war on them.  That said, Obama continues to blame their problems on republicans, business, the rich, and the white... classic class warfare that his votors are unable or unwilling to see through.  These votors need to show some personal responsibility and vote for anyone other than President Obama!

Apr 6, 2012 2:06PM
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Education?  We spend more than any other country...  With the Public Option, being so bad...

 

First we need to change education in this country.  When someone leaves High school, and not going to college they should be ready to work.  Are they?  Have they been trained to be plumbers, carpenters, bakers, barbers, electricians, mechanics or machinists?   The educational establishment turns their nose up at these professions. 

 

Second does anyone else believe that that the internet will not take over education as we know it in the next 30 years.  Will school buildings be as obsolete as post offices are today?  Sorry but the idea of classroom education is becoming quaint.  We will need eductators that can write software, not teach in a school room.

 

Third, throwing money at education has not improved it one bit.  If anything it is worse than 20 years ago.  

 

As far as infrastructure spending?   For what?  Are you spending just for the sake of spending?  Is this new infrastructure?  Or just maintaining infrastrucure?  Even Roosevelt only believed in NEW projects...  The TVA, Hoover dam, new roads.  I see no ideas on new things needed except stupid stuff, like high speed rail no one will use.  Shouldn't there be an economic benefit to new projects?

 

Sorry, but the problems we have are caused by government overspending.  We currently spend around 3.800,000,000,000.  We take in 2,200,000,000,000.  In other words we over SPEND by 42%.  We need to slash government spending and then talk about priorities.  And yes we still spend around 800 billion on defense, and this needs to drastically reduced to say 600 Billion.  That leaves another 1.400 Billion to slash from domestic spending....you can start anywhere....

 

What does that idiot Obama do?  He guts the Social Security tax, and then proposes 900 Billion in new spending up it to 4.5 Trillion...  That is why his budget lost 414 - 0.  Not even Nancy Pelosi could vote for it, it was that out of touch....  We can start to get the country back on track by firing Mr. Obama and as many Donkeys as possible in November.

Apr 6, 2012 3:04PM
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sorry, but Obama who was going to heal the great divide is clueless.  his budget was voted down 424 to 0.  he's trying to ride the unions to another four years, but if they open their eyes what good is a union when the jobs keep disappearing?  you can't even list all the dumb decisions lately.  oh well, anybody but "O" in November.
Apr 6, 2012 1:48PM
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next time up,

As we move closer to our socialist utopia, jobs in the private sector will become more and more pitiful and less plentiful. Jobs in government will be the "good jobs". F .A. Hayek wrote about this trend 60 years ago is his book "The Road To Serfdom". Good luck to you and your son.

Apr 6, 2012 2:04PM
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Where are the good news??????

 

OH! we won't have any, stupid is at the wheel............

Apr 6, 2012 3:19PM
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Gee, maybe we should try another $800 Billion "stimulus package to nowhere"!  Or, perhaps raise the debt ceiling by another trillion?  Yeah, sure, that will help!  Wondering if we'll ever get back below that 8% unemployment level that the "anointed one" claimed we would never go over?  My gawd, you libs are blinded by the reflection off of Barry's pearly white teeth all the while lapping up the "hope and change" that he's brought you!
Apr 6, 2012 12:29PM
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So if you take out the Apple Bubble, the Stock market isn't all that either. 
Apr 6, 2012 1:50PM
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The jobs report showed only 120,000 payroll jobs were created. The consensus estimate was for 205,000 job creations. While the U.S. unemployment rate fell to 8.2%, the reason was a number of workers had stopped looking for work. The number of people employed actually fell.

Charley, it's the Baby Boomer effect. We're finally leaving at 10,000 a day, 300,000 a month. It's actually a pretty good deal for Obama, $20-24,000 a year SSA benefits to open up a good job or get someone off of unemployment. It would be really nice if the FED would raise rates back to normal, 4-6%, so we could convert all these worthless equities to CDs again.

Apr 6, 2012 3:14PM
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Even if you have a job, it is going to cost a lot more to get to that job with the gas prices going higher & higher each week!  Who can afford to buy anything but the necessities?.
Apr 6, 2012 1:49PM
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If things are better then why the Down grade from AA+ to AA
Apr 6, 2012 1:46PM
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We are going to spend about 360 billion on a fleet of fancy fighter jets on top pf 60 billion for other fighter jets that never flew a combat mision and had to be grounded for technical  difficulties.

We should be spemdimg this money on education reserach and development healthcare and infrastructure.  

   Why are we the only modern industrualized country without universal healthcare that steresses preventive health care? Why doi we spend more per capita on healthcare yet have below average life exectancy and infant mortality rates?

Why do we spend an estimated 41 billion on emergency services for uninsured?

Why have we not prosecuted those who melted down the banking system with massive fraud with AAA rated mortggge backed securities full of sub prime loans?   How about prosecuting those who made millions selling fraudulent credit default swaps?

How about making all those who received special low interest loans from the government pay it all back with interest? Why are we going to lose billions on some of these deals?

This is what we all should be asking.

  

 

Apr 6, 2012 3:11PM
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When benefits run out, your not counted.  See U6 report for real unemployment.  I also read we need 350,000 jobs each month as a break-even.  Number don't add up.  Here is a very complicated formula to figure out for Washington.

 

Jobs+Jail Wall Street= housing, businesses, prosperity, health care.

 

Check to see if your representative voted for JOBS ACT, and if they did, VOTE THEM OUT.  This is the worse thing our government has done since the bail out..  It a free ride for Madoffs of the future.  Better yet, let's all start a company, USING S&L MONEY, CALL IT ENRON, AND HIRE A MADOFF AS CEO.

 

Or better yet, everyone send me all your money to invest, and in 5 years, I'll tell you were I spent it and how many jobs I created.  I estimate at least 20 in the Justice Department.

Apr 6, 2012 2:00PM
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Someone,

Perhaps the government shouldn't be spending that money at all. Our Air Force is more than capable with the weapons systems currently in use. I can't help but wonder how many trillions are wasted across the broad spectrum of our government's activities and how many of those activities end up curtailing our liberty. I also find it ironic that we spend this money on the defense of the land of the formerly free. We used to liberate others from tyranny. Now we work to form a tyranny of our own.

Apr 6, 2012 3:27PM
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Wall Street will take us back to before 2010 as far as any money gain for investors Monday. That will be two years of losses in a row . They will over react Monday and blow these job numbers out of reason with the sell off. Investors will have to look at other places to put money into because the stock market has failed America along with its leaders, It cant function or reason anymore financial. It has lost control of itself. It cant put two and two together. There is no common sense in it ability to make a decision financially. Investors are putting money in a mentally ill  institution that cant work with its investors. It is only a computor brain with no real life facts. 
Apr 6, 2012 3:25PM
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Next Time...All though you should be happy that your kid has a job..He should be happy too.

 

The biggest problem you're not entering into the equation; IS we have and are going through the worst RECESSION, since the Great Depression....And there are a lot of 35-50 year olds that don't have a job PERIOD.

Your kid has got a job similiar to a G-kid of mine that just graduated and went to work about 3-4 days a week, but making somewhat more money........

 

We and his parents see it as the "cup OVER HALF-FULL" and better days are coming...You should probably try and impress that attitude on your kid....Don't make him a loser at 20 years of age. 

Apr 7, 2012 2:16PM
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Havasu46, thats bunk.  The population continues to grow and the census says they number between 18-66 has continued to increase.  Now it is true that the number retiring has increased but SSA doesn't show anywhere near 300,000/month retiring.  We continue to have less people working now than when Obama took Office.  Sorry to say Obama's policies DROVE the unemployment rate to over 10%.  We can get  the Unemployment rate back to teh 7.1% the day Obama started, simply by lowering the government number of people looking for work by another 2 million. 

 

However, this will not help Mr. Obama.  The reality is the employment picture is not improving much.  Stabalizing maybe.  People will still see their neighbor unemployed and companies adding a few new workers, but the reality will sink in.

 

The market however will continue to move higher propelled by Helicopter Ben's continued debasing of the dollar.  With this year  likely to exceed last years 10.7% money supply increase, the market party should continue, only because there is no where else to go to protect  your puchasing power.  What is really troubling is that even with this massive 40%  new dollars in the last 3.25 years, that housing prices are still in the toliet. 

 

We can fix the economy in November, FIRE OBAMA and as many Donkeys as possible...

Apr 6, 2012 9:41PM
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If you don't want to see the USA become 'PAKISTAN WEST' or see us become a country of lords and serfs, you'd better demand that your senators and congressmen work in a bipartisan manner and start changing the divisive nature of our public discourse!!  Lightning
Apr 6, 2012 4:27PM
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unemployment fell because a number of people stopped looking for work!  This means that our entitlement programs such as welfare are too easy to live off of!  If you can live off of welfare as a full-time income, it is not working and we as a nation are falling further and further into debt!  Welfare should be a hand-up not a hand-out and NOT a lifestyle.
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