U.S. Stocks Showing A Lack Of Direction Following Monthly Jobs Report

wallstreet 08oct21 lt

With traders digesting the Labor Department's closely watched monthly jobs report, stocks have shown a lack of direction in morning trading on Friday. The major averages have spent the morning bouncing back and forth across the unchanged line.

Currently, the major averages are posting modest losses. The Dow is down 8.48 points or less than a tenth of a percent at 34,746.46, the Nasdaq is down 40.16 points or 0.3 percent at 14,613.86 and the S&P 500 is down 1.71 points or less than a tenth of a percent at 4,398.05.

The choppy trading on Wall Street comes after the Labor Department released a report showing much weaker than expected job growth in the month of September.

The report said non-farm payroll employment rose by 194,000 jobs in September after climbing by an upwardly revised 366,000 jobs in August.

Economists had expected employment to jump by 500,000 jobs compared to the addition of 235,000 jobs originally reported for the previous month.

Despite the much weaker than expected job growth, the unemployment rate fell to 4.8 percent in September from 5.2 percent in August. The unemployment rate was expected to edge down to 5.1 percent.

With the bigger than expected decrease, the unemployment rate dropped to its lowest level since hitting 4.4 percent in March of 2020.

However, the drop in the employment rate was partly due to a decrease in the size of the labor force, reflecting lingering labor supply constraints.

The data had led to some uncertainty about the outlook for monetary policy, almost most economists agree the disappointing job growth will not dissuade the Federal Reserve from scaling back stimulus.

"The disappointing 194,000 gain in non-farm payrolls in September probably still counts as 'decent' enough for the Fed to begin tapering its asset purchases next month," said Andrew Hunter, Senior US Economist at Capital Economics.

He added, "But alongside signs that activity growth is slowing sharply, at the same time as worsening labor shortages are putting serious upward pressure on wage growth, it looks set to leave Fed officials in an uncomfortable position over the coming months."

Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broader markets.

Energy stocks are seeing significant strength, however, with a sharp increase by the price of crude oil contributing to the strength in the sector. Crude for November delivery is jumping $1.71 to $80.01 a barrel.

Reflecting the strength in the energy sector, the Philadelphia Oil Service Index is up by 2.8 percent, the NYSE Arca Oil Index is up by 2.5 percent and the NYSE Arca Natural Gas Index is up by 1.6 percent.

Financial, gold and airline stocks are also seeing some strength on the day, while interest rate-sensitive utilities stocks have moved to the downside.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index jumped by 1.3 percent, while China's Shanghai Composite Index rose by 0.7 percent as trading resumed following a week-long holiday.

Meanwhile, the major European markets are turning in a mixed performance on the day. While the U.K.'s FTSE 100 Index is up by 0.4 percent, the German DAX Index is down by 0.2 percent and the French CAC 40 Index is down by 0.6 percent.

In the bond market, treasuries have moved lower over the course of morning after initially showing a lack of direction. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3 basis points at 1.601 percent.

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