Friday, April 4, 2014

Markets rise after March jobs report

Dow advanced 24, advancers over decliners 5-2 & NAZ dropped 28.  The MLP index jumped 2+ to the 476s (another record) & the REIT index rose 1+ to 288.  Junk bond funds were strong & Treasuries rallied.  Oil rose for a 2nd day after US employers increased payrolls in Mar.  Gold also had a good gain, taking it near 1300.

AMJ (Alerian MLP Index tracking fund)

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLK14.NYM...Crude Oil May 14...101.29 Up .....1.00 (1.0%)

GCK14.CMX...Gold May 14.......1,298.20 Up ...13.80 (1.1%)

U.S. Hiring
Photo:   Bloomberg

US employers boosted payrolls in Mar & the unemployment rate held at 6.7% even as more Americans entered the labor force, showing steady progress that will probably prompt Federal Reserve policy makers to continue reducing stimulus while keeping interest rates low.  Payrolls rose 192K after a 197K gain in Feb (larger than first estimated), according to the Labor Dept.  The forecast projected a 200K gain.  Private employment, which excludes gov jobs, surpassed the pre-recession peak for the first time.  Employment in Jan & Feb was revised higher, showing the effect on the labor market from inclement winter weather was less severe than previously thought.  The gain puts payroll growth in step with the average over the past 2 years & shows companies are optimistic about the outlook for demand.  The agency’s survey of households showed about 0.5M entered the labor force, & at the same time, almost as many found work.  The figures also showed an increase in the number of people employed part-time.  The participation rate, which indicates the share of working-age people in the labor force, edged up to 63.2% from 63% a month earlier.  The number employed as a share of the working-age population increased to 58.9%, the highest since Aug 2009.  Private payrolls, which don’t include gov agencies, increased 192K, the most in 4 months, after a 188K gain.  With last month’s increase, total private payrolls reached 116.1M, surpassing the pre-recession peak.  Factories reduced payrolls by 1K after adding 19K in Feb.  Construction companies boosted employment by 19K workers & retail payrolls rebounded 21K.  The number of temp workers (typically low paying jobs) jumped 28K.

Payrolls in U.S. Rose 192,000 in March, Unemployment 6.7%

German factory orders rose in Feb, adding to signs that growth in Europe’s largest economy is gathering pace.  Orders, adjusted for seasonal swings & inflation, rose 0.6% from the prior month, the Federal Statistics Office reported.  The forecast was for a gain of 0.2%.  Growth in orders for Jan was revised lower to 0.1% from 1.2%.  Germany’s economy probably saw “substantial strengthening” in Q1, the Bundesbank said last month, citing a recovery in the euro area & warm winter weather that bolstered construction.  Still, sentiment surveys from business confidence indexes to gauges of manufacturing activity have shown that companies face headwinds from slowing growth in China to an escalation of tensions between the EU & Russia.  Domestic orders increased 1.2% from the previous month, while export orders climbed 0.2%.  Orders from the euro area surged 5.9%, & those from outside the bloc dropped 3.1%.  Total orders climbed 6.1% from a year earlier.

German Factory Orders Gained in February as Growth Picks Up

Micron reported fiscal Q2 sales that beat estimates as limited supply bolstered prices amid lackluster computer & phone demand.  EPS was 61¢, compared with a loss of 28¢ a year earlier.  Revenue almost doubled to $4.1B.  That compares with a projection for EPS of 59¢ on sales of $3.99B.  MU acquired Japanese rival Elpida Memory last year.  Even with the return to production of a Chinese plant owned by SK Hynix that was damaged by fire & continuing declines in PC shipments, the market for computing memory remains strong, Mark Adams, MU pres said.  “It’s a pretty good time in memory right now,” he added.  “This type of performance for the company has been better than we’ve had in the last decade.”  MU is the largest remaining US manufacturer of dynamic random access memory chips, or DRAM, semiconductors that provide the main memory in PCs.  That market has been hit by the first consecutive annual decline in its history as consumers increasingly embrace smartphones & tablets.  The Elpida purchase brought Micron a bigger chunk of the DRAM market to help it gain scale & provide more of a return for its technology investments.  It also added production of a type of DRAM used in smartphones, which require less power-hungry chips.  The stock went up pennies.  If you would like to learn more about MU, click on this link for Trend Analysis:

Micron Sales Top Estimates as Supply Cuts Support Prices

Micron Technology (MU)

Even though the jobs report showed new jobs missed the estimate, markets were basically relieved & rallied.  But NAZ keeps getting dragged down by a weak pharmaceutical sector, as Apple (AAPL) has been flattish in 2014.  While the employment data has been fairly good, new jobs created since the recession have had lower wages & the lagging effects from Obamacare (higher cost & lower levels of coverage) are just beginning to be felt.  Dow & the S&P 500 are flirting with setting new records.

Dow Jones Industrials

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