What the Fed Will Be Looking at in Friday's Employment Report

For today's entry, Barry Ritholtz's Friday column is an excellent dissection of yesterday's jobs report that sent the market into a 300 point panic.  He reads between the lines and elaborates on the critical parts of the report that the Fed will likely be giving its greatest focus.

Wall Street ends lower as jobs data may bring rate hike sooner

Yesterday I mentioned that if the bad jobs report came in today as expected, it would probably give the market a boost.  I should have added that if it was a good report, we could expect another big sell-off.  Today's jobs report was in fact exceptionally good and Wall Street responded in kind with a major plummet to the tune of  279 points.  Investors were hoping for no more than 240,000 new jobs in order to quell interest rate fears.  The actuals came in at 295,000 or 55,000 more jobs than forecast, and this sent the market into a panic.  As Fortune magazine noted, "A strong jobs report is supposed to be good news, but investors did not appear to get that memo Friday, as U.S. stocks suffered a broad sell-off."  Though the Fed has been quite consistent in its position that there would be no interest rate hikes until the economy was on very solid ground and, even then, they would be small and gradual, investors just don't seem to want to believe this.  And today had the additional wrinkle that, due to the very strong report, unemployment is now down to 5.5 percent, a full 0.2 percent drop from January, and the watershed level at which the Fed has always said that it might take action.  So the 5.5% reported today, the lowest in ten years and the official definition of "full employment," was not good news for investors, yet another irrational case where good news for the economy translated to bad news for stocks.  Every one is now on pins and needles awaiting next week's Fed meeting.  It doesn't seem to matter that the Fed recognizes that there are still too many Americans underemployed and that action will not be taken until that issue is resolved.  Other really good news is that Apple finally reached its own watershed moment, today becoming so large that it was dropped from the Nasdaq and added to the Dow, with longtime icon AT&T being dropped from the Dow to make room.  Predictably Apple's shares rose and AT&T's fell.  Volume was robust and considerably above recent averages at 7.2 billion.  

Wall Street closes up slightly ahead of jobs report

A modest uptick today to the tune of 39 points as investors remain on the fence waiting for the big February jobs report tomorrow. My guess is that the modest gain was because yesterday's private employers report was a little under forecast so bets are that so will be tomorrow's report.  This is what Wall Street wants - a slowdown in hiring so that the Fed votes to keep interest rates low at the March meeting.  This was typified in today's prediction that "people are anticipating some fireworks tomorrow."  If that does indeed happen, there should be another boost.  Adding to this scenario is today's jobless claims report coming in 25,000 over estimate.  The fence sitting was also demonstrated by the lower than average volume, which today was 5.7 billion shares, down from recent averages of 6.5 billion.

Wall Street down for second day after rally; healthcare gains

A second consecutive day of consolidations and profit-taking sent the Dow down another 106 points.  No worries is the consensus though since a bit of selling off had to be expected after such a great February.  Even the latest great challenge to the ACA failed to rile anybody as the market bets that the Supreme Court will continue to uphold the administration.  The selloff can be better explained as a hedge against possible bad news later this week as more reports come in.  As always, investors' interest is focused on the jobs report and, as has happened so many times before, it will be considered bad news if we get a strong report as that will be taken as a sign of an impending Fed interest rate hike.  Once again, good news for the economy will be considered bad news for Wall Street.  Go figure.  The economy continues to improve across most regions and sectors and this is reflected in the 6.3 billion share volume, which is in line with recent averages.

Wall St. falls from records, led by technology stocks

After a fabulous day yesterday and even more fabulous month in February, the market pulled back a bit today to consolidate and ponder, bringing the Dow down 85 points.  Part of it was soft auto sales numbers, attributed to the very harsh wintry February we've now endured for the second consecutive year.  Part of it was just good old fashioned profit taking after reaching landmarks highs.  But most of it was just more fence sitting as investors await a battery of economic reports later this week including the all important payrolls report.  The consensus is that optimism is very high and this was reflected in the slightly lower than average volume of 6.3 billion shares.

U.S. stocks rally; Nasdaq hits highest level since 2000

Everyone had a really great day today, the Dow and S&P reaching new records and the Nasdaq having its best day in 15 years, today up over the 5,000 mark for the time since before the dot.com bubble burst in 2000.  What's behind this flurry of activity that pushed the market up 155 points?  No great mystery, unless it's considered a mystery why investors are finally figuring out what we've known for some time -- companies are healthy not because of any artificial props but because of real productivity, real products and real profits. As today's expert says, "Real earnings and revenue are driving the Nasdaq now."  So we had a really terrific day.  But don't hold your breath.  No sooner was all this good news in hand when everyone jumped back on the fence again and you can guess why.  All eyes now are on a report due Friday that is expected to give more hints about the Fed's intentions regarding interest rates.  How many times does the Fed have to state its position before the market will believe it?  Volume was in line with recent averages at 6.43 billion.

Succinct Summations of Week’s Events 2.27.15 (& bonus)

Presenting your usual Sunday night eye-shot of all the significant macro and micro economic events that shaped the world of finance this week. Every now and then in his weekend column, Barry Ritholtz gets back to basics and writes about essentials.  Friday he did just that with excellent and concise musings about rational approaches to the markets aimed squarely at the individual investor.