Stocks Trade Lower After Jobs Data Disappoints Investors
This morning's jobs report was weaker than expected. I have been saying that the incoming economic data will continue to be lumpy, and that we should not expect a smooth upward trajectory of improvement. The payrolls report showed the economy lost 190,000 jobs (vs. -175,000 consensus). The unemployment rate also ticked up to 10.2%, the highest rate since 1983.
Those figures will not make for very good headlines, but what will not be reported is that the jobs data for the previous two months was revised higher to show less jobs lost than previously estimated. That said, the unemployment rate shows that this is still another jobless recovery, and that slack in the economy should convince the naysayers that the Fed is on hold from raising rates for a longer time than most perceive.
In earnings news, Starbucks (SBUX) reported a solid report and raised guidance, and its stock is higher. AIG also beat estimates, but its stock is nearly -10% lower today, and weighing on the financial sector.
The dollar is roughly flat, while gold has reached new highs ($1097) and oil is lower, breaking below $78. Materials and industrial stocks are bucking the weakness and leading the action so far.
Asian markets were higher overnight; the 10-year yield is lower at 3.50%; and the VIX is another -3% lower despite the sellof in stocks, hitting 24.65 which is right at its 50-day support.
Trading comment: The S&P 500 is back above its 50-day average, and holding there so far today. I will probably look to add to some long positions today, while still leaving room to add more if we get a further correction after this bounce runs it course. The market is still oversold, and I think that is acting as support and helping keep the market from falling further on a day like today when the jobs report could have led to a larger selloff.
long SSO, VXX