Why stocks rose after jobs disappointment

Traders have apparently decided to buy into the argument -- again -- that weak U.S. economic numbers mean more quantitative easing.

By Jim J. Jubak Sep 7, 2012 6:37PM
Dice on newspaper stock pages © Tom Grill, PhotographerBack to reality.

After a day Thursday when stocks soared on promises that the European Central Bank would stand behind Italian and Spanish government bonds, Friday we're back to the same old real world.

And the same old investment theory.

U.S. job growth for August was a disappointing 96,000. That’s below both the consensus of 130,000 jobs among economists surveyed by Briefing.com and the revised numbers for July showing growth of 141,000 jobs. The private sector added 103,000 jobs in August, down from 162,000 in July.

You might expect U.S. stocks to be down on the disappointment, but instead the Standard & Poor's 500 Index ($INX) rose less than 1%.

Traders have apparently decided to buy into the argument -- again -- that weak U.S. economic numbers mean the Federal Reserve is more likely to institute a third round of quantitative easing, or something to stimulate the economy, when the Fed’s Open Market Committee meets on Sept. 13.

I think that’s unlikely, but positioning your portfolio to avoid/catch a potential Fed stimulus has been a winning strategy for the last month, so why change horses now?

It will be interesting to see how traders decide to re-position their portfolios after a Fed move -- one way or the other -- is off the table after Thursday. The Open Market Committee’s next meeting after next week isn’t until Oct. 24.

At the time of this writing, Jim Jubak didn't own shares of any companies mentioned in this post in personal portfolios. The mutual fund he manages, Jubak Global Equity Fund (JUBAX), may or may not own positions in any stock mentioned. For a full list of the stocks in the fund as of the end of the most recent quarter, see the fund's portfolio here. 
97Comments
Sep 10, 2012 8:45AM
avatar
I hope for once Bernanke has the good sense to avoid another QE program......higher grocery and fuel prices that would result is something this country does not need that right now. Bernanke needs to be fired. He wants to make sure Obama gets re-elected to keep his job because he already knows he will be out if Romney becomes president.
Sep 9, 2012 7:47PM
avatar
A question .Can someone tell me how much the dow is up from Jan.7,2000 to Sept 8,2012? 1800points.............1​​50 points a year .We are really making money now.LOL  
Sep 9, 2012 7:46PM
avatar
nasdaq high Jan.2000 .........4572 points...........hig​​h Sept 8,2012 ............3176 points............do​wn1376 points in 12 years .Just think long term.What a joke. 

Sep 9, 2012 7:35PM
avatar
What I am hoping for is Mitt the, I want to be president so bad, will buy himself the presidency with other people's money and and will tank the country. Then I can sit back and laugh the rest of my life away at all the stupid people that voted for him.  Republican's will not even care if they tank the country, because they will have their tax free money to play with. We need to educate American's on what the Republican party stands for. This is a private party for the rich only! Wise up America!
Sep 9, 2012 4:48PM
avatar

I find that it will happen either this month or next. The fed will launch another QE. They will watch it leave it's moorings, founder, then sink. the economy is becoming overwrought with mal investments, debt, and an elephantine government.

Sep 9, 2012 7:46AM
avatar

Please Reagen got reelected elected and unemployment was at 7.9 don't change the systen now

 

people are always leaving the job market and remember the baby boomers are retiring everyday.

Sep 9, 2012 7:43AM
avatar
Boy Romney is scared to release those taxes he know he robbed the american people of tax dollers
Sep 8, 2012 11:15PM
avatar
My prediction:  The Fed will try to come up with some kind of stimulus, but it won't be anything major and it won't move the stock market much.  Look for the Obama administration to try something to stimulate construction and other jobs by some targeted spending measures or acceleration of some projects already underway.
Sep 8, 2012 10:57PM
avatar
It seems that Jami Parker's comment didn't get properly posted.  I wonder what he/she had to say?
The economy is staggering along, but growing a bit.  We need some productive stimulus to get things moving ('productive' is the key word here.  Our roads and passenger RR system are in pretty sad shape, especially bridges.  If we built some high speed rail and improved intra-city bus and light rail, it would not only put people to work in construction, but also enhance worker efficiency by getting people to work faster, and in a more productive frame of mind.

Unfortunately, we are in a debt bind.  While only Bill Clinton reduced the national debt, there has been a spendthrift mentality since (and including) Ronald Reagan at the top in Washington.  The spending has been particularly wasteful in terms of excessive military outlays, including at least one unnecessary war--Iraq.  However, all that spending enriched mostly the wrong folks--the top military-industrial corporate managements and bank managements--to the detriment of the people who do most of the real work in this country, union or not.  Several Republican Presidents in the past did not tolerate this kind of inequality, including Teddy Roosevelt and Dwight Eisenhower.  We have not had a decent Republican President since Dwight Eisenhower, in my opinion.

The military-industrial complex has grown enormously despite Eisenhower's warnings--and the extreme right wing of the Republican party is a major danger to our democracy.  The Koch brothers and Adelson and his corporate ilk have bought the country--and the Supreme Court has enabled them.

I hope that if you are a Republican you will think long and deep about where your party--and its ultra-rich fat cats, and their corporations, are taking us.

Sep 8, 2012 9:48PM
avatar
Construction has historically been 20% of our economy.  Construction volume fell nearly 70% in 2008 and has leveled off at only 30% of the 2008 volume.  There has been virtually no recovery in the construction industry.  The tarp money is spent, state money for capital expenditures is almost non-existent and private development has not come back because no one can qualify for financing.  Most industries have adequate plant capacity. Builders fight for the reduced number of projects at unsustainable margins, just trying to keep the doors open, while laying off 70 % of their workforces. More and more are now shutting their doors.  Other industries only fell around 10% and most have come back to near pre - 2008 levels.  Investment banks will not make loans to legitimate borrowers because of new rules combined with the fact that they are making more money in the stock  and bond markets than in lending for commercial or residential development projects.  Construction always.... always.... always  leads the way out of recession!  Fix the banking regulations, so legitimate private developers and home owners can borrow money again and finally lead us out of  "The Great Recession".  Until construction comes back, unemployment will remain near 8% and GDP growth will remain abysmal.
Sep 8, 2012 7:43PM
avatar
propaghanda,the economy is doing great.Don't let Romney rain on your parade.The higher in spirit you are the better the economy,the better the jobs market.Positive means good great grand. Romney means down down down.
Sep 8, 2012 4:57PM
avatar
nasdaq high Jan.2000 .........4572 points...........high Sept 8,2012 ............3176 points.............down 1376 points in 12 years .Just think long term.What a joke.
Sep 8, 2012 4:56PM
avatar
To any Republican ------high unemployment is music to their ears.  Why, because the higher the unemployment is................... the cheaper you have to pay that labor. 
Sep 8, 2012 3:06PM
avatar
Jubak is a shill.  There is no cogent reason to read or believe anything he writes.  I have repeatedly asked how much he pays MSN to publish his nonsense; MSN has, so far, refused to disclose.
Sep 8, 2012 2:38PM
avatar

I'm kind of curious, with the way people through around the religions when they speak of Obama, I wonder if they will do the same for Romney, after all he is a Morman...

This land was built on tolerence and freedoms of religious beliefs, wether you had them or not. There are A ton of good practicing Muslim's, that do not deserve the conotation that the Republican hype machine is trying to give that religion. It only goes to your intellegence, considering "the official religion of OB is Christianity". Its this type of language that makes Americans disliked around the globe, we tout how free and loving and accepting we are of everyone, then we turn around and use A religion as a "bad" adjective. It is really disgraceful, and you should be ashamed, after all I assume you're A god-fearing christian yourself, who has such devoted beliefs, except for maybe the whole love thy neighbor thing. Or does that only apply if your neighbor practices the same religion.....For some, I suppose it does.

Sep 8, 2012 2:35PM
avatar
A question .Can someone tell me how much the dow is up from Jan.7,2000 to Sept 8,2012? 1800 points.............150 points a year .We are really making money now.LOL
Sep 8, 2012 2:20PM
avatar
hehe and how is the fed going to come up with this fictional QE3 money?? sell off chevy dolts, I mean volts on ebay that are no longer being built?? oh I'm sorry, temporarily suspended, translation: we're gonna keep going on with this tiredazzed sharade until obama is gone and then we're gonna cancel the volt finally and start building affordable cars again, 2months left until a REAL change we can believe in comes to pas FINALLY!!!
Sep 8, 2012 1:55PM
avatar
Bad jobs numbers means downward wage pressure.  Publically-traded companies love bad jobs numbers.  The stock market is booming while the average wage has decresed 7.4% since Obama took office.  Big O and the democrats serve big govt and big business and to hell with small business and the average man.
Sep 8, 2012 1:42PM
avatar

Yesterday I rec'd a letter informing me that my electric company would apply for a 4.6% increase . Who do I send a letter to for an increase of 4.6% ?  I get it now , Santa !

Sep 8, 2012 1:08PM
avatar
Maybe they like the fact unemployment stays high so they can get away with paying less and cutting benefits and the employees can be made to work harder and still won't change jobs.
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

126
126 rated 1
286
286 rated 2
474
474 rated 3
680
680 rated 4
626
626 rated 5
609
609 rated 6
620
620 rated 7
462
462 rated 8
304
304 rated 9
132
132 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
AAPLAPPLE Inc10
BIDUBAIDU Inc10
BXTHE BLACKSTONE GROUP L.P10
CELGCELGENE CORP10
FOXATWENTY-FIRST CENTURY FOX Inc CLASS A10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.