(As of 7:25 am PST)
Wall
Street opened down Friday as investors reacted to a mixed non-farm payrolls
report which seems to suggest a stronger-than-not case for a September Fed rate
hike. The headline jobs number showed weakness as the private sector added
173,000 jobs in August, lower than the 217,000 expected by most economists. However,
upward revisions to June and July’s non-farm payrolls helped to overcome the
August reading, pushing analysts toward the September rate case. Digging deeper
the report also showed the unemployment rate falling to 5.1%, the lowest level since
April 2008, while average hourly earnings rose 2.2% year-over-year in August
matching the best gain in 4 years. There seems to be enough strong data points
in the overall report that suggest a higher probability of a September rate
hike than not. Thus, the market’s reaction today. In a good news-bad news sort
of way, the market is trading down the report with more participants
speculating toward the September case than later. There’s also perhaps a fear
of China’s return to the action Monday, after being sidelined for holiday the
past two sessions. Other Asian indexes finished Friday’s trade lower, while
European indexes are also on pace for greater than 2% losses Friday. Gold is
providing no safe-haven support today, with the precious metal down 0.5% to
$1119/oz. while oil prices are also down nearly 1% at this writing. Interest
rates are flat, while the US dollar is up slightly. One gets the sense that a
rate hike is coming later this month, especially after the reception of today’s
August employment report.
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