How the jobs report may affect stocks

The Labor Department issues its August report before Friday's open. Investors are looking for data that give the Fed room not to trim its bond buying.

By Charley Blaine Sep 5, 2013 7:25PM
Construction workers © image100/CorbisStocks have had a pretty good week, thanks to half-way decent numbers that have offset worries about Syria.

But the big test comes Friday, after the Labor Department releases the August jobs report. The consensus estimate is for the unemployment rate to remain at 7.4%, unchanged from July. Non-farm payrolls are expected to rise by 180,000.

The report will be viewed by investors around the world in the context of the Federal Reserve, whose Federal Open Market Committee meets Sept. 17-18. The big issue then will be whether the Fed will taper its bond buying program, which has kept interest rates low.

Here's how the report, due at 8:30 a.m. ET, could affect markets. And remember that tapering is being interpreted by bond traders as a de facto rate increase. The 10-year Treasury yield has jumped from below 2% in early May to nearly 3% as of Thursday.

A big report -- the unemployment rates falls and payrolls jump more than 250,000 -- could give markets a lift because the economy is growing more strongly than thought. But it would guarantee the Fed would trim back its bond-buying program, and that might curb the enthusiasm.

A modestly positive report -- the unemployment rate falls to 7.3% and payrolls meet estimates -- might excite traders. The Fed wouldn't feel compelled to taper, and stocks would rise in response.

A modestly weak report -- the unemployment rate holds at 7.4% or rises and payrolls come in at, say, 160,000 -- could get the market thinking the Fed will delay tapering. That might depress interest rates but lift stocks. Stock prices move up when rates fall.

And a bad jobs report -- the jobless rates moves higher and payrolls are significantly weaker than expected -- could generate a sell-off, reflecting worries about the economy.

Several things to watch in the report:

Changes in private payrolls. The ADP National Employment Report, released Thursday, estimated private-sector employers added 176,000 jobs in August, a little weaker than the 180,000 expected but in line with the average over the last two years. The Labor Department's data have put private sector gains at about 193,000 a month for the last two years.

Changes in government payrolls. Sequestration and deep cutting in state and local governments has been a sizable drag on the economy.

Construction employment. It fell in three of the last four months ending in July. Part of the issue may be more rain in some parts of the country. Higher interest rates also may be taking a toll.

Wage gains. Wages fell back very slightly in July and have risen just 1.9% over the last year.

Hours worked. The average work week has been holding at about 34.4 hours for at least a year.
 
The lack of wage gains and stagnant hours are often cited as a reason why retail sales have been stagnant. But auto dealers reported a very buoyant month of sales in August and expect the trend to continue.

The Dow Jones industrials ($INDU) finished Thursday up 7 points to 14,937. The Standard & Poor's 500 Index ($INX) added 2 points to 1,655. The Nasdaq Composite Index ($COMPX) rose 10 points to 3,659.

The major averages are looking at a winning week, which would be welcome. The Dow is up 0.9% for the week, with the S&P 500 up 1.4% and the Nasdaq 1.9%. The Dow has fallen for three straight weeks; the S&P 500 and Nasdaq for two of the last three weeks.

Healthcare, oil service, steel and airline stocks led the market. The laggards were gold, real estate and utility stocks, all sensitive to rising interest rates.

UnitedHealth (UNH) was the Dow leader; 15 of the 30 stocks in the index were higher. Microsoft (MSFT) was up 4 cents to $31.24. It had fallen in six of the seven prior sessions and is down 6.5% this week. (Microsoft owns and publishes Top Stocks, an MSN Money site.)

Fastenal (FAST), which makes tools and fasteners, was the top performer among S&P 500 stocks and second-best among Nasdaq-100 stocks after Sears Holdings (SHLD). Some 284 S&P 500 stocks were higher, along with 58 Nasdaq-100 ($NDX) stocks. The index was up 5 points to 3,130.

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27Comments
Sep 5, 2013 10:27PM
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read the third paragraph down, talks about whether the fed will taper its bond buying program, why did they start this in the first place? because no one wants our bonds any more, we are the reserve currency of the world which allows the U.S. to print, print, money to buy our own debt with worthless unearned money and to spend more than we take in, Soon the world will force our country to stop this practice and people , you better be prepared
Sep 5, 2013 7:59PM
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Who cares? The whole world knows what moves stocks-- it's fiat money from Central Banks. There are NO business platforms with useful work ethics and NO economy. Those who bought into the ignorant notion that playing in markets would make them rich are indeed believing what they are seeing, but the FACT is- without basic function, they might as well be playing Monopoly. There are 90 MILLION under and unemployed Americans-- not Romney's 47%- they were gainfully employed in 2008, terminated by corrupt alumni and job blocked since. If it wasn't so, they would still have active resumes and be trying. People stop for two reasons-- they are dead or there is an immoveable impediment to the search. With China and Russia BOTH telling Obama-- don't blow up Syria or it will cost you and, don't taper QE or it will cost you... we are painted into a corner. The road ahead has a fork in it... we can abruptly end QE, close the banks, end the Fed and get RID of Wall Street. Will it hurt? Yep. Can we survive it? In ONE DAY we could shift revolving credit software to virtual script and carry the nation. It trashes all foreign hanger-on-ers, including China and Russia. It wipes out fools like Dimon and Blankfein but creates a progress for enterprise. Yes, administrators go home without pay and go insane texting. The other fork blows up Syria and invites the Will of the World on us. We end up closing the banks, ending the Fed and getting rid of Wall Street by conversion of focus. Personally, I'd prefer to have OTHER nations deal with Syria and attack financial tyranny HERE. We win when we do. The Fed's Fisher has condemned QE and Obamacare. I agree. Anyone NOT on board for taking back control of our future by suppressing financiers and lifting entrepreneurs is in the wrong country.  
Sep 5, 2013 8:47PM
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The "earnings" that move the rigged markets are fake, driven by printed money, deficits, and chinese job shipping. I guess it doesn't matter what happens to our country or the people as long as Wall street speculators get their stinking short term profit. Aren't those harvard grads at goldman sacks great?

Sep 5, 2013 9:51PM
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Wheelbarrows full of worthless paper - mmm, mmm, mmm!

Sep 6, 2013 12:45AM
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There is a dark horizon looming over our economy.  The 40 work week is history because of Obamacare.  Employers are off the hook to pay Obamacare penalty if employees are cut to 29 hours per week or less.  Health insurance has skyrocketed and now americans have to pay Obamacare penalty for not having health insurance.  The days of 40 hour work week and benefits are gone!  Everyone I know has been cut to below 29 hours per week and looking for another part time job.  The once great american economy has gone to sh_t.
Sep 6, 2013 1:06AM
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Obummer's "jobs reports" are fictitious, made-up pieces of paper to make people feel good.  The economy isn't improving.  As soon as someone's unemployment benefit runs out, the gov't thinks they are working again.  If they are working, it's for 50% less than they made before.   When we lose jobs, they don't come back.  Companies become more efficient by learning to operate with less.
Sep 6, 2013 2:54AM
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Wall Street doesn't really care about the unemployment rate - it's just an excuse for a Friday in Sept sell.
Sep 6, 2013 7:02AM
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Reality-- so Obama failed to sway any new bomber buddies to knock out Syria, but he did manage to cheese off Putin and Jinping. Yesterday, we all read the articles that said Services are humming along (importing) and Manufacturing (indigenous making) is at a 4-month low. The International Trade Gap is now a canyon losing ground. If you are in enterprise and ok with your inventory stores, you are looking at sustainability in a vacuum state. If not, the sudden STOP in imports and lack of localized reserves, compounded by hyper-inflated gas prices (wars do that) will end your business platform investments abruptly. That leaves YOU and YOUR stock-- NOT. We've had 3 days of artificial pumping of the markets while Bill Gross publicly announces that bonds are tanking. Really, what more can you put in your glass of Kool Aid that tells you to hold and even buy? $7.7 Billion pulled from bonds didn't go into stocks and it isn't buying gold.
Sep 6, 2013 5:52AM
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Corporations are giving their top executives Cadillac Health Plans and Golden Retirement plans. Corporations are overpaying their top executives by underpaying YOU. They get to vote on their benefits while telling you that you can't vote on yours. Corporations are refusing to hire more workers but prefer instead to devote huge resources to stock buybacks and dividend payouts. Meanwhile, they are cashing OUT while telling you to cash IN. Yet some posters see nothing wrong with this. We can' t have a strong America if Corporations are destroying what's left of the Middle-Class. We can't have a strong America if Corporations refuse to pay workers a living wage. So because of this, we have Global FEDS printing to infinity.

The Jobs Report is just as accurate and or inaccurate as it has always been for decades. Nothing has changed concerning that in spite of those telling you otherwise. What has been under reported, the Underground Economy which has been soaring. Wall Street has built excuses regardless of what the Job Report is. However, if the ten year hold 3% or more while  crude prices kept rising, the Job Reports will be the least of the near term worries.

Sep 6, 2013 8:18AM
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The REAL headline should say "How artificially inflated job numbers are affecting the rich's artificially inflated stock prices."
Sep 6, 2013 8:36AM
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Reality check i still hear sucking sound jobs leaving usa whats left to jobs in usa .Employment will rise when you concider we lost 40 million jobs in manufactoring only 3 million left . Thanks to our goverment buying all imports from companys who out sourced our jobs our taxs increasing to pay for imports with our tax dallors. Mean while goverment spending future tax dallors on products that use to be made in usa but isnt any more. Untill goverment stops spending our taxs on imports we are doomed
Sep 6, 2013 7:02AM
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No matter what the news turns out to be Wall Street will sell off!! Wall Street is dead set on taking away the gain for the year and no news good or bad will change there minds!
Sep 5, 2013 10:29PM
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OK, we all know the music is about to stop with a few million chairs short. So, many lose their seat in what was the only game in town for the person who served an employer and thought they invested to fund a vanishing retirement account.

The need for cheap money to fund the federal government's grand pie in the sky plans, dried up a common man's ability to compensate for even the most modest of inflation rates.

The middle class will once again find the brunt of socialized medicine's expense imposed upon them.

The tea party seems to be a lost answer to the frustration of taxation without representation.

Ignoring the impending perfect storm will leave you scarred for life. If you have a job, it is in jeopardy. If you have no income, you are a rudderless sailboat with no safe port in sight.

Or go Buy some stock and keep pumping sunshine and polishing off lollipops.

Syria is a United Nations problem. Let them handle it if they are so all knowing and powerful.
Don't stir up a Hornets nest without shelter in sight. Don't you doooooo it. 

Don't expect a politician to create a positive effect personally in your life unless you work for one.

These are ideas not taught in school. Don't expect too much of a public education. 

If you don't support our Congress and President, Why do the activities that demand payment of tax? Our country was great because we worked and pulled together. Who divided us? When you discourage those who toil long enough, they will give up and stay home. And they are, or are about to. It's going to be a long, dark, cold winter if this market sells off hard and fast. The debate on how the economy is doing will cease though. Take Care. 
Sep 5, 2013 10:13PM
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Wall street will find a way to make money till they cant anymore which is i believe is not in my lifetime. In the meantime it does not matter it goes up or not. Or it does not matter the average investor gains or looses their pants.
Sep 5, 2013 8:08PM
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Earnings is what moves the market.Only idiots who don`t know the stock market from the

super market cry fiat money.

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