Wobbly markets after mediocre jobs report

Stocks began higher on a jobs report that had muddled signals at best. But sellers took over. Dow is down 53, decliners 15% ahead of advancers & NAZ fell 8. The more time traders have to think about the jobs report, the more they are inclined to sell stocks. Banks led the way down as the index clearly broke thru its 10 month suppoirt level of 185, very discouraging.


S&P 500 FINANCIALS INDEX

Value	182.54
Change	-1.53 (-0.8%)

The Alerian MLP Index is recovering lost ground after yesterday's decline. It's up 3 to 307 today & 7 above yesterday's low. These wilder swings are becoming more common for an index which was known for its low beta characteristics. REITs are weak, the index slipped 4 to 184 & is only up 2 YTD. Junk bond funds were pretty much flat. The VIX, dropped 2 to the 30s but that may not last if markets sell off further. Treasuries were lower, taking the yield on the 10-year Treasury bond up 4 basis points to 3.96% (but just off its 14 month low).

Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks




VIX --- 2 weeks




10-Year Treasury Yld Index --- 2 weeks





Oil & gold were pretty much flat, not a lot else to say. Gold is being hurt by the stronger €.

CLQ10.NYM

...Crude Oil Aug 10

...72.87

... 0.08 .......(0.1%)

GCN10.CMX

...Gold Jul 10

...1,203.80

... 2.50 .......(0.2%)

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Census layoffs cut the nation's payrolls in Jun for the first time in 6 months, private employers added a modest number of jobs. The unemployment rate dipped to 9.5%. While this was its lowest level in almost a year, it remains at an unacceptable level. Employers cut 125K jobs last month, the most since Oct. The loss was driven by the end of 225K temp census jobs. Businesses added a net total of 83K workers, an improvement from May (but below Mar & Apr totals). The unemployment rate dropped from to 9.5% from 9.7%, the lowest since Jul 2009. However it fell because 652K gave up on their job searches & left the labor force. Businesses are still slow to hire amid a weak economic recovery. The US still has 7.9M fewer private payroll jobs than it did when the recession began. It takes about 100K new jobs a month to keep up with population growth & the economy needs to create jobs at least twice that pace to quickly bring down the jobless rate. All told, 14.6M were looking for work in Jun. Counting those who have given up their job searches & those who are working part time but would prefer full-time work, the underemployment rate edged down to 16.5% from 16.6% in May (again, unacceptable numbers). The average work week shortened to 34.1 hours from 34.2, a disappointing drop after 3 months of gains. Hourly wages also fell 2 pennies to $22.53. The declines mean workers earned less money in the last month. These weak jobs figures follow other gov reports this week that suggested economic growth could slow in the coming months.

Orders to US factories declined broadly in May after 9 straight months of gains. The Commerce Dept said orders for manufactured goods decreased by 1.4% in May, the biggest drop since March 2009. Excluding the volatile transportation sector, orders fell 0.6% following 1.0% growth in Apr. These numbers cast a cloud over the manufacturing sector after factories have been a rare bright spot, helping lead the country out of recession with increased hiring & productivity.

Payrolls in U.S. Fell 125,000 in June; Jobless Rate at 9.5%


Manufacturing payrolls - 1 year






The € continues strong, gaining to almost $1.26. With a long weekend coming up in the US, there will be more time to assess the jobs report numbers. On balance, they point to a weak economic recovery. Longer term unemployed will be losing gov payments unless they are extended further, making for a bleaker outlook on the jobs front. PM trading will probably be fairly quiet, with a negative bias because Dow is floundering at 9 month lows.


Dow Jones Industrials --- 2 weeks

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