Friday's Jobs Data???

The stock market action for Friday showed how resilient the market can be even when negative news floods the news wire. I mentioned on Thursday’s blog post that the July nonfarm payrolls would be released on Friday. I stated that if the numbers were negative stocks would most likely head lower. This is a very important number to pay attention to.

Well the numbers weren’t good! Non farm payrolls fell to 131,000. Analyst’s predicted the total number was to be about 65,000 jobs lost. That’s double the amount of jobs lost compared to what was predicted. The other key number taken from this report is the addition of private employment jobs and the number fell short of expectations adding only 71,000 compared to the analyst’s number of 90,000. Private employment is a better gauge of the health of the economy. Also, the unemployment rate stayed unchanged at 9.5%

Although the overall numbers weren’t very good there were a few positives that came out of this report. Those 2 positives were 1. The average hourly earnings were up 0.2% and 2. The totals hours worked in a week were up slightly by 0.1%. Any increase in these 2 numbers is positive as this shows improvement to the internal data towards to recovery of the jobs market.

All numbers and research was derived from

http://www.reuters.com/article/idUSTRE6752JM20100806

In my opinion jobs will continue to be a sore spot in the stock market over the next few months. This is the single most important short term catalyst to take this market higher. Seeing the stock market basically unchanged on Friday shows the indecision of investors. Without some data point I believe the market will gradually go lower. Don’t get me wrong I’m a true optimist, but the indices have run up through the month of July due in part to the spectacular earnings we have seen from many of the large companies. With earnings season coming to a close and the weak jobs report I see the market trading sideways if not to the downside in the short term.  Hopefully I’m dead wrong and the market trucks higher, but after all 3 major indices have run up roughly 9.0% since July 1st I don’t see this happening.

Next week the FED will be speaking about the state of the economy and my recommendation is to sit tight and not buy any stock until after the FED meeting. We haven’t had a major sell off in quite sometime so please be prepared and have some money sitting on the sidelines to buy when an opportunity presents itself.

Have a great weekend!

Clay-

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