The Putin Swoon
The markets opened higher after a softer jobs report sparked hopes that the Fed would hold off on tapering due to the economy not strengthening as much as previously thought.
But soon after the open came comments from Putin that Russia will assist Syria in the event of an attack. This shouldn't be a big surprise as Russia has been providing them with weapons for years, but the notion that Russia would join Syria in a fight vs. the US spooked the market.
The Dow swooned 100 points fairly quickly. But as Obama's speech in St. Petersburgh got underway the fear in the markets subsided and stocks slowly reversed their losses and clawed their way back to positive territory.
So it has already been a pretty volatile day in the first hour of trading. Still a lot of time left today, and volume will likely be light again. So we will have to see if the market can hold onto these gains into the close.
The August payrolls report showed an increase of 169,000 jobs, which was below estimates of nearly 180,000. Moreover, July payrolls were revised sharply lower to 104,000 from 162,000. The unemployment rate did tick lower to 7.3% from 7.4%, but this isn't what it seems. The drop was actually once again the result of a decline in the labor force participation rate. At 63.2% this rate is now the lowest since August 1978.
Trading comment: Confusing action so far today, but it's how the market closes that counts. The S&P 500 is still about 5 points below its overhead 50-day average. So its still too early to start getting bullish again as we will have to wait until next week to see if this latest market correction has basically run its course of if there is still some more consolidation in store for the equity markets. Talk should also heat up about the potential for a Fed taper at its upcoming meeting.