The Bureau of Labor Statistics released the non-farm payroll report for the month of February this morning.
The headline number came in at 175,000
vs. the Bloomberg consensus estimate of 150,000.Â
After Wednesdayâ€™s weaker-than-expected ADP private payrolls report -- which saw net gains of 139,000 vs. expectations of 155,000 and January revised lower from 175,000 to 127,000 -- market participants were looking for a weaker report courtesy of the extreme weather during the month.
Additionally, the employment component of the February ISM services report on Wednesday showed the first month of contraction; the number dropped to 47.5 after 25 straight months of gains. Services jobs made up 70.3% of the labor force in the US in January.
It is important to remember that investors look not only at the current monthâ€™s payroll change, but the prior two monthsâ€™ revisions as well, and that Wall Street economists have been revising their estimates lower in front of todayâ€™s release.
On Wednesday, Deutsche Bank
(NYSE:DB) economists lowered their estimate to 120,000 from 150,000, and Goldman Sachs
(NYSE:GS) lowered it to 125,000 from 145,000. However, the consensus estimate of 150,000 did not change despite whispers to the contrary.
Here's our two ways to play:
Since the February 5 low in the S&P 500 (INDEXSP:.INX), stocks have rallied to hit all-time highs, and the surge this week could indicate that equity market expectations are creeping higher.
Looking at a daily chart of the S&P for the past nine months, weâ€™re bumping up against a trend line that has provided resistance in the past. While there is potential for the S&P to reach 1900 or higher (there is projection that works to S&P 1960), there may be better risk-reward elsewhere after the run weâ€™ve seen.
The retail sector is lagging the broader averages year-to-date and has endured some ugly news of late, including earnings misses from Costco (NASDAQ:COST), Staples (NASDAQ:SPLS), and RadioShack (NYSE:RSH).
With expectations low and sentiment bearish, the Merrill Lynch Retail HOLDRS ETF (NYSEARCA:RTH) could pop short term on good economic numbers, and a move through $61.50 would trigger a breakout.
After a 66% run in 2013 and a 15% year-to-date gain, biotech has been the hottest sector in the market -- even hotter than social media.Â Â
However, the hand-over-fist buying that sent stocks like Biogen Idec (NASDAQ:BIIB) and BioMarin Pharmaceuticals (NASDAQ:BMRN) flying has taken a breather of late, and the sector is 6% off recent highs.
Shorting the iShares Nasdaq Biotechnology ETF (NASDAQ:IBB) could be a good option for those with a bearish outlook and a high risk tolerance.
If sentiment really shifts, biotech traders could shed even more exposure to the sector, and a break of $260 would be a technical negative.
Also see:Â Peter Atwater: An 'Oligopoly in Confidence' Puts Global Markets at Risk
No positions in stocks mentioned.
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