No Jobs, No Problem: Bulls Take Control and Close the Week on a High Note
Today's financial recap and tomorrow's financial outlook.
This morning, the highly-anticipated August nonfarm payrolls report was released. 142,000 jobs were added last month, 38% below the 230,000 consensus. Additionally, the past two months' readings were revised down by a total of 28,000.
The unemployment rate was in-line with expectations, as were hourly earnings.
Initially, the S&P 500 (SPX) traded lower to 1,990.10, a new low for the week, but the bulls caught their breath mid-morning, and equities traded steadily higher into the close. The negative economic data could be interpreted as favoring Fed dovishness, fitting the familiar 'bad news is good news' themethat has permeated the market in recent years.
The S&P finished up 0.5% to 2,007.70, an impressive comeback that crushed the bears' dream of a negative close for the week following three straight down days.
We also saw intraday reversals in riskier areas of the market like biotech, retail, and small caps.
Treasury yields were volatile, with the 10-year falling as low as 2.389% in the aftermath of the NFP release. However, yields marched up for the duration of the trading sessions.
Even with the creep higher in rates, utilities was the strongest sector today by a long shot.
The broader mood was aided by a possible ceasefire in between Ukraine's government and pro-Russia separatists. President Obama said at a press conference that the US stands ready to institute tougher economic sanctions on Russia in cooperation with Europe. And NATO announced it would put a quick reaction force of 5,000 troops in East Poland, presumably to keep Vladimir Putin's eyes off other former Russian territories like Lithuania and Estonia.
From a broader perspective, the pressure could lead to a resolution sooner rather than later. Russia's MICEX Index was up 1.1%, and German stocks were also positive, indicating optimism.
Tomorrow's Financial Outlook
The news calendar is pretty light for Monday, with July Consumer Credit on tap at 3:00 p.m. ET. It is unlikely to move the market. Campbell's Soup (CPB) will report fiscal fourth-quarter earnings before the market open.
Ukraine and the MIddle East remain sources of uncertainty. We've been in a regular pattern of alternating good and bad news, so there is no no tellling what could happen over the weekend.
In the meantime, the bulls remain in control as the bears remain unable to make a serious stand, even in the face of unfavorable economic data and news.
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