Jobs report offers stocks only a little cheer
The Dow has its first weekly gain in a month, but stocks end basically flat on worries about continuing slow job growth. Syria worries add to volatility.
The economy added 169,000 jobs in August and the unemployment rate dropped to 7.3%, the lowest level since December 2008, the Labor Department said Friday.
But Wall Street wasn't impressed. The gains for payroll employment missed Street estimates, and original estimates for July and June were revised lower.
Add to that, a separate measure of employment that includes the self-employment suggests fewer people were working in August than in July.
The Dow Jones Industrials ($INDU) closed down 15 points to 14,923, ending a three-day winning streak. The Standard & Poor's 500 Index ($INX) was barely positive at 1,655. The Nasdaq Composite Index ($COMPX) sported a gain of 1 point to 3,660.
The good news for the week: The Dow had its first weekly gain after four losses in a row. The S&P 500 and Nasdaq were up for the second time in the last five weeks. The Dow is up 13.9% for the year; the S&P 500 is up 16.1%, and the Nasdaq is up 21.2%.
It was a volatile day, to be sure. The Dow was up 52 points right after the open, but the market slumped badly soon afterward, with the Dow down as many as 148 points. The reason was Russian President Vladimir Putin's vow to "assist" Syria if attacked over the government's alleged use of chemical weapons against its citizens gas in that country's civil war.
What Putin meant was unclear. Russia already provides Syria with military equipment and can veto any action decided by the United Nations Security Council.
The selling basically ended after President Obama said again that a U.S. response would be "limited and proportional" to the attack in suburban Damascus last month that killed more than 1,400, including at least 400 children. Obama will address the nation on Syria on Tuesday, but it appears he may fail to win Congressional endorsement for a move.
Fact is, however, that Wall Street spent the day unsure if the report was good news or bad news. If the major averages are any indication, the answer is, actually, inconclusively annoying -- because the report left so many questions unanswered.
Some investors believed the report might be weak enough that the Federal Reserve might defer a decision to taper its $85-billion-a-month bond buying program when it meets later this month. Interest rates fell as well.
But others came away gloomy, the gloom exacerbated by the uncertainty over Syria. For investors, the bottom line was this. Stocks were flat on the day, but stocks were higher for the week. Friday's finish may make next week problematic.
The jobs report bothered a lot of people for a lot of reasons. The payroll gain missed the street estimate of 180,000. In addition, investors were also disappointed that the government cut its job-gain estimates for June and July. The unemployment rate was mostly inline with estimates.
Hugh Johnson of Hugh Johnson Advisors said the jobs report was "very disappointing." The issue was the unemployment rate, which fell because people were leaving the workforce.
Plus, the jobs being created are not high-paying jobs. So, the comment of Philippa Dunne and Doug Henwood of the Liscio Report carries weight: The labor market is healing," they wrote on Friday, "but progress is ragged and slow. "
While non-farm payrolls hit 136.1 million, the highest level since September 2008, the report also shed light on how the economy's loss of momentum during the summer.
The Labor Department cut its job growth estimates for July and June by a total of 74,000. July job growth was cut to 104,000 from 162,000. June growth was trimmed to 172,000 from 188,000. Private-sector employment rose by 152,000 to 114.3 million. Estimates for July and June also were revised lower.
Interest rates moved lower after the employment numbers came out. The 10-year Treasury yield dropped back to 2.938%, down from Thursday's 2.979%. Gold (-GC) settled up $13.50 to $1,386.50 an ounce. Crude oil (-CL) in New York was up $2.16 to $110.53 a barrel, its highest settlement since May 2011. That was a function of fear that a Syrian attack might cause the Middle East to explode.
The crux of the dismay over the jobs report was the labor participation rate, which was reported at 63.2%, the lowest level since 1978. That's a function of baby boomers retiring and many workers simply dropping out of the work force. The participation rate measures the number of people working or looking for work
The labor force fell by a total of 312,000 in August, The New York Times noted. Among the biggest factors for the decline was men dropping out. The work force of men 16 years or older fell by 339,000, Labor Department data show. The number of women 16 or older in the work force actually grew by 99,000.
A separate measure of unemployment that includes workers who would look for jobs if there were jobs and those taking part-time work but would prefer full-time work was 13.7%, down from 14% in July and a peak of 17.2% in October 2009.
Average hourly earnings increased by 0.2% in August over July. Average hours worked rebounded to 34.5, from 34.4, and temporary employment increased by a solid 13,000.
The number of long-term unemployed (those jobless for 27 weeks or more) was roughly unchanged at 4.3 million. These individuals accounted for 37.9% of the unemployed. Over the past 12 months, the number of long-term unemployed has declined by 733,000.
How flat was the day? Well, just half the 30 Dow stocks were higher, along with 246 S&P 500 stocks and half the stocks in the Nasdaq-100 Index ($NDX). Half of the 10 sectors in the S&P 500 were higher.
The leaders were utilities (because of lower interest rates) and consumer staples, often more stable when markets overall are volatile. That suggests the buying was defensive with modest interest in risk at best.
Hewlett-Packard (HPQ) was the top Dow performer, up 30 cents to $22.42, followed by JPMorgan Chase (JPM) and Alcoa (AA).
Chipmaker Advanced Micro Devices (AMD), American Tower (AMT) and E*Trade Financial (ETFC) were the S&P 500 leaders.
Expedia (EXPE) and Facebook (FB) were the top Nasdaq-100 performers. The index was up 3 points to 3,133.
While the Dow, S&P 500 and Nasdaq are higher for the year, they have been struggling since peaking in early August.
The Dow is off 4.7% since peaking on Aug. 2. The S&P 500 loss over the same time period is 3.2%. The Nasdaq is down just 0.9% since closing at 3,658.78 on Aug. 5, its best finish since Sept. 28, 2000.
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An interesting little fact about the folloing line in this story. "The report showed the labor participation rate was at 63.2%, the lowest level since 1978. That's a function of Baby Boomers retiring and many workers simply dropping out of the work force. The participation rate measures the number of people working or looking for work"
The 1980 Jimmy Carter era census shows that there were 226 million people in the US. the 2010 barack Obama era census shows that there were 309 million people in the US. There are 83 million more people in the US under Obama than under Carter.
Do the math on what a 63.2% labor force participation rate meant in raw numbers of unemployed people under Carter's worthless leadership compared to under Obama's regime.
Don't believe this government media garbage, it simply is not the truth!
You want a war? Start a war on "CREATING JOBS"
As for "Syria" both sides are crazy enough to "gas" their own kind in order to win their ethnic war, so let them. Neither side can be trusted, and each side will turn on United States when the war is over.
This is a regional conflict, so let the countries in that region decide who is right and who is wrong and let the nations of the region step in. Saudi wants to foot the bill, then let Turkey and Israel join forces and defeat Syria.
Muslims beliefs go all the way back to Abraham and Ishmael when Ishmael was taken out into the desert with his mother and left to die. The Muslim people have nothing but a religion to live or die for and there is no compromise. Their religion calls for all others to die as Ishmael would have died had not God intervened, so let them go on with nothing but their religion and a bucket of sand.
Muslims hate Christians period, they will turn on us like a rabid dog.
A response of: "limited and proportional'????? Didn't I hear those exact words from the movie: The American President....incredible...now those idiots in the White House are watching movies to determine our foreign policy comments and or responses!
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Stocks drift lower and bonds are hit as investors await the Fed. Prepare for higher volatility this week.
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