(As of 7:15 am PST)
The fourth quarter is off to a disappointing start as
blue chips lead the way with a triple digit decline on the Dow. In a data heavy week, there was plenty for
investors to sort through at the opening of the session. The ADP jobs report,
often seen as an indicator for the more reliable non-farm payrolls jobs report,
came in strong with private-sector job gains of 213,000 in August. Hiring picked up for the sixth consecutive
month; a good sign for the labor market.
As we’ve seen in the past a ‘good news, bad news’ scenario seems to be
playing out again in the labor market as the improving jobs data has brought
concerns that the Federal Reserve may begin its policy tightening on short term
rates soon. Adding to the negative sentiment were disappointing reports on
construction spending and the ISM index, a measure of manufacturing activity.
In other news, yesterday’s report of the first contracted case of the Ebola
virus on US soil has sent biopharmaceutical stocks soaring. Tekmira Pharmaceuticals led the charge as
investors scrambled for bets on companies that would profit from drug
treatments. The Ebola outbreak is yet another in a long list of ‘macro’ risks that
the market is facing right now. The volatility index (VIX), also known as the
fear gauge is up 5% today. As we enter historically the most bullish time of
the year for stocks, expect a tug of war between the bulls and bears to ensue.
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