Will the jobs report give stocks another jolt?

The Dow closes at a new high for a third straight day. Gains, however, are modest ahead of Friday's big jobs report.

By Charley Blaine Mar 7, 2013 6:21PM
The great 2013 rally continued Thursday, although with only modest gains -- that were fueled by momentum and a surprising improvement in jobless claims.

In other words, the economy is giving a little energy to the rally, and there are hopes Friday's jobs report will make investors more bullish. There are low expectations for the report: a national unemployment rate of 7.9% and perhaps 160,000 new payroll jobs added to the economy. The report is due at 8:30 a.m. ET.

The Dow Jones industrials ($INDU) closed up 33 points to 4,329, another new closing high, and the blue chips set another intraday high, 14,354.69, around 11 a.m. ET. The Dow pushed through its 2007 peak close of 14,164.53 on Tuesday.
The Standard & Poor's 500 Index ($INX) gained 3 points to 1,544, leaving the index about 21 points below its peak close of 1,565.15, set on Oct. 9, 2007 -- the same day the Dow hit its 2007 peak. The Nasdaq Composite Index ($COMPX) was up 10 points to 3,232.

The market got a boost when the Labor Department said jobless claims fell to a seasonally adjusted 340,000 in the week that ended on March 2. That was down from 347,000 for the week of Feb. 23, and the second lowest reading of the year. The number is subject to revisions and probably will change.

But looking at the four-week moving average for the series offers a clearer and positive view of the picture. The average was 348,750 for the past week, down from 355,750 the week before and is at its lowest level in five years.Trading floor © Corbis

The average smooths out the week-to-week volatility and gives a clearer view of the trend. The average has been as high as 659,250 in March 2009 and as low as 266,250 in April 2000.

The Dow is up 9.4% for the year, while the S&P 500 is up 8.3%. The Nasdaq has risen nearly 7%.

The Dow's and S&P 500's gains so far in 2013 are bigger than they were at this time a year ago. The Nasdaq's gain is a touch more than half as large as its 12.7% gain on March 7, 2012 is smaller.

That's probably due to Apple's (AAPL) 20% loss for the year. Apple is, in fact, down about 39% from its closing high of $702.10.

One of the consequences of that decline is that Apple is no longer a darling of the investment community. Google (GOOG) , up 18% this year and 9.5% in 2012, is now the most-owned stock  by the top 50 mutual funds, a Citigroup report said. Google is also the top holding among hedge funds.

The rally continues to attract increasingly loud critics, who argue the market is overbought  and due for a correction.

The main issue they believe is the Federal Reserve's low-interest-rate policy, that many think will set off inflation pressures. Or the bond market will get crushed when the Fed starts to raise rates. Bond prices move inversely with interest rates.

But no one in Washington believes Chairman Ben Bernanke is about to change course now.

At the same time, JPMorgan Chase noted this week that the Dow would have had to hit 15,502 to match its 2007 peak on an inflation-adjusted basis.

And The Fiscal Times pointed out that Dow's performance by itself is not nearly as good as its performance with dividends included. In fact, the Dow Jones Industrial Average Total Return Index ($DJITR) has been hitting new highs since 2011.

A number of other indexes, including the Dow Jones Transportation Average ($DJT), have hit new highs.

Lastly, Los Angeles Times columnist Michael Hiltzik noted the stock market rally has benefited a relatively modest number of people: the affluent and upper managements.

From 1993 through 2010, according to Emmanuel Saez, an economist at the University of California Berkeley, the top 1% of income earners captured 52% of all real income growth.

"During the latest recovery, which corresponds to the post-2008 bull market," Hiltzik wrote on Wednesday, "that figure was 93% through 2010 -- obviously, through stock gains and corporate dividends."

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13Comments
Mar 7, 2013 10:56PM
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The jobs report is manipulated to give the appearance that things are better than they really are.  Why doesn't someone produce a report that shows jobs that were eliminated for the month?  The majority of jobs being created are lower wage without benefits but of course the reports never say that.
Mar 8, 2013 12:01AM
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I don't believe Bernanke has an exit strategy  for all the printing.  Did he check into the roach motel and has no way out?
Mar 8, 2013 8:30AM
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My favorite this week just appeared today... Household wealth returns to pre-recession highs" $16 trillion is-- where? In the markets? Who's household? Buffett's?

 

If this is the President's "agenda" then we are genuinely screwed. He gave it to paper pushers and button pressers? WTF... they can't boil water, stay married or manage within a budget, but they have college degrees.

Mar 7, 2013 11:20PM
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Lot of truth to what you put to the paper or screen Charley..imo

 

Don't really buy the low level hype from JP Morgan...and their adjusted inflation basis

THEY are TALKING and COMPARING.....30 Large Cap Companies.

 

We have added or Dollar cost averaged into a ton of more equities, of only about 3-4 on the DOW at this time..The rest listed on the other exchanges...Probably 30% more in shares in the last 3-4 years.

With roughly about twice as many shares held in 2007....

The last couple years by plowing all or most dividends back...Don't need them to live.

And then taking profits on partials of high flyers, to expand or diversify.

 

By the end of January, first couple weeks of Feb....We were about 11-12% ahead for the YTD..

Now only 4-6% because of Goldminers and a couple not-so-good-news-bears or dogs that might be barking back soon...If a hint of inflation, the Gold will run.

But only holding about 7-10% in Yellow now., use to be about 30%

These are not day trader type stocks, except maybe one?

With 22-25 positions, and an average price over $35, with 4 positions above $70-75 p/s.

Average dividends on 22 pos. at around 6%...

It's not all about, just the 30 Components on the DOW..

 

A couple pieces of advice I would tell any investor or non-investor, that's considering jumping in.

You have to trade, you have to adjust and re-allocate, you have to diversify, you cannot be completely risk-adverse, you can't be afraid or cry over spilt milk, and you have to have steel balls or boobs...Whichever fits...And don't look back unless someone is chasing you. 

Mar 8, 2013 8:33AM
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I think we are reaching the culmination of all this anti-commonsense stuff. If it boggles the mind, there is corruption behind (it).
Mar 7, 2013 11:32PM
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Keep up the Good work Charley and a few others...

You guys are losing readers and commentors, because of dribble and articles about the "price of tea in China."

How many blurbs can be written about McDonald's bad service or Best Buy's dilemmas.

And some strange stuff in the Fast Food at some Drive Thru..Or a foreign Country..

And how many bites can we take out of an Apple(aapl).

 

Investing is serious stuff, to some;  And well written opinions or articles are what I come for, along

with updated facts or figures....Not a bunch of blow with 20 articles a day..Too much to read.

I don't need old news...That's what TV is for..

Mar 8, 2013 12:50AM
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He is only one person on the FED board....It will be a concenus when they make their moves.

And without doubt a majority rule..

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