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Mixed Jobs Data Leads To Roughly Flat Close On Wall Street - U.S. Commentary

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With traders digesting the closely watched monthly jobs report, stocks turned in a relatively lackluster performance during trading on Friday. The major averages eventually ended the day on opposite sides of the unchanged line.

While the tech-heavy Nasdaq inched up 4.82 points or 0.1 percent to a new record closing high of 6,590.18, the Dow edged down 1.72 points or less than a tenth of a percent to 22,773.67 and the S&P 500 dipped 2.74 points or 0.1 percent to 2,549.33.

Despite the mixed performance on the day, the major averages all posted strong gains for the week. The Dow surged up by 1.6 percent, while the Nasdaq and the S&P 500 jumped by 1.5 percent and 1.2 percent, respectively.

The mixed close came following the release of a report from the Labor Department showing an unexpected decrease in employment in the U.S. in the month of September.

The report said non-farm payroll employment fell by 33,000 jobs in September after climbing by an upwardly revised 169,000 jobs in August. Economists had expected employment to rise by 90,000 jobs.

The Labor Department said a sharp decline in employment in food services and drinking places and below-trend growth in some other industries likely reflected the impact of Hurricanes Harvey and Irma.

Despite the unexpected drop in employment, the unemployment rate dipped to 4.2 percent in September from 4.4 percent in August. Economists had expected the unemployment rate to hold at 4.4 percent.

With the unexpected decrease, the unemployment rate fell to its lowest level since hitting a matching rate in February of 2001.

The report also showed a notable acceleration in the pace of wage growth, as average hourly employee earnings were up by 2.9 percent year-over-year in September compared to 2.5 percent in August.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said the 0.5 percent monthly increase in wages came as many low-paid restaurant workers were temporarily out of a job.

"Overall, the Fed and the markets will just ignore this report," Ashworth said. "If past-storms, particularly Katrina, are any guide, employment will rebound markedly over the next few months."

He added, "The drop in the unemployment rate might persist, however, with consumer and small business surveys both pointing to a drop in the unemployment rate to nearer 4% for some time."

Traders may have been reluctant to make significant moves following the recent upward trend, with the drop by the S&P 500 snapping an eight-day winning streak.

Sector News

Most of the major sectors showed only modest moves on the day, although energy stocks saw considerable weakness amid a steep drop by the price of crude oil.

Crude oil for November delivery plunged $1.50 to $49.29 a barrel after climbing $0.81 to $50.79 a barrel on Thursday, with the pullback attributed to renewed oversupply concerns.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index slumped by 1.4 percent, the NYSE Arca Natural Gas Index slid by 1.3 percent and the NYSE Arca Oil & Gas Index fell by 0.9 percent.

On the other hand, gold stocks showed a strong move to the upside, driving the NYSE Arca Gold Bugs Index up by 1.3 percent.

The strength in the gold sector came amid a modest increase by the price of the precious metal, as gold for December delivery rose $1.70 to $1,274.90 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved to the upside during trading on Friday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both rose by 0.3 percent. Markets in mainland China remained closed.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index edged up by 0.2 percent, the French CAC 40 Index fell by 0.4 percent and the German DAX Index dipped by 0.1 percent.

In the bond market, treasuries finished the session modestly lower but well off their worst levels. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2 basis points to 2.370 percent after reaching a high of 2.402 percent.

Looking Ahead

The economic calendar for next week starts off relatively quiet due to the Columbus Day holiday on Monday, although reports on producer and consumer prices and retail sales are likely to attract attention later in the week.

The Federal Reserve is also due to release the minutes off its latest monetary policy meeting next Wednesday, potentially shedding some light on the outlook for interest rates.

Additionally, financial giants Citigroup (C), JPMorgan Chase (JPM), Bank of America (BAC), and Wells Fargo (WFC) are due to report their quarterly results next week as the earnings season gets underway.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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