Jobs Report Disappoints, But Unemployment Rate Still Falls
The market was slightly higher in early trading, but has since slipped a bit below the flat line. Overseas trading was mixed, with some Asian markets gaining overnight (China), but Europe trading mostly lower this morning. There is also continued concerns in Europe about the debt situation, and the Spanish and Portuguese banks in particular.
Today's big economic report was the December nonfarm payrolls report, which showed that the economy added 103,000 jobs. That was well below the 150,000 jobs forecast, and I even heard whisper numbers yesterday that were looking for more than 200,000 jobs to be created. So on the surface the jobs report was a little weaker than expected. That said, the unemployment rate fell from 9.7% to 9.4%, which is a slight positive, even as most of it comes from a decrease in the overall labor force.
Fed Chairman Bernanke testified before Congress this morning, and said that most FOMC members expect the unemployment rate to hover north of 8% for the next couple of years, and that it could take 4-5 years to return to "full employment".
He also said that the economic recovery is continuing, but at a pace that is insufficient to reduce unemployment significantly. But growth should be stronger in 2011 than it was in 2010.
The dollar is roughly flat this morning, and commodities are mixed. Gold is a little lower again near $1367, while oil prices have bounced a bit to $89.
The 10-year yield is lower to 3.35%; and the volatility index is down -2.4% to 17.0.
Trading comment: The concerns in Europe continue to escalate, but for the time being they have not let to much selling here in the U.S. The ISEE call/put ratio opened at a sky high 361, indicating no bearishness among options traders at the moment. I continue to lock in some profits in things like commodity-related names (steel, etc), which could correct a lot, and have raised a bit of cash to put to work on any correction. My early call was that the beginning of January could show some strength that turns into a headfake before a pullback. We are still early in the month, so I'm taking it day by day.