(As of 7:20 am PST)
Equity markets are struggling to find direction this
morning as investors dug into the Labor Department’s nonfarm payrolls
report. According to the report, the US
economy added 175,000 new private-sector jobs in February, well above estimates
and the biggest increase in 3 months. The unemployment rate ticked up, however,
from 6.6% to 6.7% as the labor force (people actually looking for jobs)
increased for the second straight month.
Unemployment has risen by an average of 54,000 per month in 2014
compared to an average drop of 160,000 per month in 2013. After congress cut off unemployment checks
for nearly 2 million people in 2014, many estimates called for a decreasing
labor force and thus a drop in the unemployment rate. This all matters because the Federal Reserve
has said it would begin raising short term interest rates once the unemployment
rate hit 6.5%. Therefore, February’s
bump up has given the Fed more “wiggle room” in setting rates. All in all, the report paints a muddied
picture of the labor market. Markets are
divided on the day with the Dow gaining momentum to the upside, while the
Nasdaq is down and S&P500 up slightly.
Gold is lower and oil higher.
Interest rates shot up after Treasuries sold off on the perceived good
news of the jobs report. It looks like a back and forth day is shaping up.
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