Jobs Growth Tepid At Best

Markets were higher in early trading, but have since started to pullback such that the S&P 500 remains higher while the Nasdaq has reversed into negative territory.

The September jobs report that was delayed last month was released this morning.  It showed that nonfarm payrolls increased by only 148,000 in September, below estimates for 183k jobs.  Private payrolls were similarly weak at 126k vs. 183k estimates.  Surprisingly, once again the unemployment rate declined to 7.2% from 7.3%, likely due to continued labor force shrinkage.

While tepid jobs growth is not the sign of a strong economy, stock investors took it to mean that the Fed would be less likely to taper any time soon and would likely keep their foot on the monetary gas pedal - which is normally good for stocks.

The bond market inferred a similar message.  The yield on the 10-year T-note dropped 8 basis points to 2.53%.  That marks a 3-month low in bond yields.  And interest rate sensitive investments such as utilities, preferreds, etc are rallying today.

Meanwhile, earnings reports continue to roll in fast and furious. 

Stocks rising on earnings: DAL, NFLX, VMW, LMT, TRV, WHR, ITW, NVS, KMB, NUS, AAMC, R, FCX

Stocks falling on earnings: COH, TXN, UTX, CIT, EMC, IDXX, HOG, PNR, STT

Folks will also be watching a press conference from AAPL today where it is expected to release its new iPads.

Asian markets were mixed overnight.  China fell despite home prices climbing +9.1% year/year and gaining in 69 out of 70 cities.

European markets are trading near their highs of the day.  Germany upped its growth forecast slightly for 2014 from 1.6% to 1.7% GDP growth, while holding 2013 steady at 0.5%.

The volatility index is up 4% so far to 13.75.

Trading comment: The market continues to exhibit strength as it extends its gains into new high territory.  This is why we wanted to start dipping our toes in the water and putting some cash to work during the debt ceiling debacle.  Because when the market starts rallying it usually moves quickly.  We continue to like stocks that are leading the market and nearing new breakouts.  We don't want to try to pick laggards hoping they will catch up.  With the Fed likely on hold, a big headwind for stocks has been removed from the market - at least until the next debt ceiling negotiations surface again.

KAM Advisors has long positions in AAPL