Payroll Data Not Too Hot, Not Too Cold

The market likes this morning's economic data. Payrolls came in a little light (111k vs. 150k consensus), and the unemployment rate ticked up slightly to 4.6%. If you are in the camp that is hoping for a Fed rate cut later this year, then you do not want to see the labor market heat up too much.

The markets seem to like this mornings report, with both the stock and bond markets rallying. The S&P 500 is hitting a new high, while the 10-year yield is falling another 2 basis points to 4.82%.

Reactions to earnings reports seemed to improve at the margin this week, with several large-cap stocks gapping higher after reporting earnings. This tells me that expectations maybe aren't too lofty.

The homebuilders are having another good day so far (+2.6%), followed by semis (+1.0%). Energy and materials stocks are lower.

In other news and notes:

• Asian markets rise overnight
• Heelys profiled in New America section of IBD
• Global chip sales hit record $247.7 bln in 2006
• Equity Office reaffirms support for Blackstone transaction
• Cognizant Tech target raised to $100 at Jefferies
• Monster Worldwide tgt raised to $62 from $57 at BofA
• Akamai Tech downgraded to Hold at Maxim- tgt $55
• WAG Jan same store sales increase 10.8% vs +8.0% single estimate
• NYSE Group misses by a penny, beats on revs
• Alliant Tech tgt raised to $103 from $96 at Friedman Billings