(As of 7:20 am PST)
Markets are rallying this morning on a ‘bad news is good
news’ sort of move. The US nonfarm
payrolls report for September came in much lower than expected. The private sector created 148,000 jobs in
September, lower than estimates of 185,000.
The unemployment rate ticked down from 7.3% to 7.2% while the labor force
participation rate (which measures how many people are looking for work)
remained near a 35 year low. The jobs
report, which was delayed by 18 days due to the shutdown, signaled an economy
that is growing at a modest pace. September’s
report and the impacts of the government shutdown will likely dampen growth for
the remainder of the year. Why is this
good for markets? Investors are now
speculating that the tepid growth signals the Fed will likely push back their
bond tapering plans until at least spring of 2014, maybe later. Let the easy money continue to flow. Signs of this trade are evident in the
treasury market today with treasuries rallying as interest rates dropped. Besides the jobs report, investors are
trading a big earnings day. Netflix
reported a beat yesterday, while Texas Instruments reported falling
profits. DuPont, Coach, Delta Air Lines,
Harley-Davidson, Lockheed Martin, and RadioShack are some other names expected
to report today. Gold prices are higher
by 1% as Fed taper worries subside. We’ll
see if the market can hold this rally today.
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