Friday, February 6, 2015

Markets fluctuate after jobs report

Dow rose 33, decliners slightly ahead of advancers & NAZ gained 15.  The MLP index retreated 1+ to the 455s & the REIT index lost 6 to 346.  Junk bond funds slid lower & Treasuries saw selling.  Oil went up to the 51s & gold sold off.

AMJ (Alerian MLP Index tracking fund)

CLH15.NYM...Crude Oil Mar 15...51.45 Up .....0.97 (1.9%)

GCG15.CMX...Gold Feb 15.....1,240.60 Down ...21.40  (1.7%)

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The US labor market leaped forward in Jan, capping the greatest 3-month jobs gain in 17 years & delivering the biggest wage increase since 2008.  Payrolls advanced 257K last month following increases in Dec & Nov that were even bigger than previously reported, according to the Labor Dept.  The unemployment rate rose to 5.7% from 5.6% as more than 1M Americans streamed into the labor force seeking work.  The growth in jobs will probably help assure Federal Reserve policy makers that the expansion is well-rooted & can withstand an increase in interest rates later this year.  Average hourly earnings jumped 0.5%, the most since Nov 2008, from the prior month.  They were up 2.2% over the past year, the biggest advance since Aug.  Payroll gains averaged 336K over the last 3 months, the strongest since 1997.  A striking aspect of the report was an upward revision to prior months.  Revisions to prior reports added 147K jobs to payrolls in the previous 2 months, which also incorporated adjustments back to 2010.  Job gains in January were led by retailers, construction firms & health-care companies.  The survey of households, used to derive the unemployment rate, showed 1.05M entered the labor force & 759K found work.  These numbers also reflect new estimates on the size of the population.  The participation rate, which indicates the share of working-age people in the labor force, increased to 62.9% from 62.7% in Dec.  Private hiring increased 267K after an advance of 320K the month before.  Employment at retailers climbed 46K last month, while payrolls in health care & social services rose 50K.  The average workweek for all employees held at 34.6 hours.  Even as job growth has firmed over the past year, a pickup in wage growth has been slower to take hold.

Jobless Rate at 5.7%

German Chancellor Merkel is pessimistic about Vladimir Putin’s willingness to defuse the crisis in Ukraine as she heads into emergency talks with the Russian leader.  Merkel’s message for Putin is that Russia faces tougher actions from Europe unless he agrees to help end the escalating violence that’s put the Ukrainian army & economy on its knees.  Merkel & French pres Hollande will press Putin to implement the Minsk cease-fire agreement from last Sep.  “As the German chancellor, I would never go behind the back of another country, in this case Ukraine, and start questioning its territorial integrity -- that is completely ruled out,” Merkel told reporters.  “We don’t know if we’ll be successful today or if further talks will be needed.”  Pessimism prevails on all sides.  Merkel sees little chance of getting Putin to change his mind; officials in the Obama administration say there’s little anyone can do to stop pro-Russian separatists from seizing more territory; & in Moscow, policy makers are increasingly coming to the view that the war-torn Donetsk & Luhansk regions will eventually cede from Ukraine.  Hanging over the talks is the prospect of deeper sanctions on Russia, an economic collapse in Ukraine & the risk that the conflict descends into a proxy war.  While Merkel has rejected arming the Ukrainian army & pres Obama is said to be skeptical, some officials and diplomats in Washington are openly discussing the idea.  Heavy fighting has forced more than 1.5M to flee their homes, with some 600K Ukrainians having sought refuge in neighboring countries in the last year.  In addition, many are still trapped by the fighting, including in basements & buildings under constant bombardment.

Pessimism Prevails

LinkedIn's push into China & new products geared to advertisers & salespeople are starting to pay off, with the professional-networking service issuing a profit forecast for 2015 that topped estimates.  LNKD said that EPS for 2015, excluding certain items, will be $2.95, topping the $2.74 estimate.  User growth was steady, climbing 25% to 347M members.  CEO Jeff Weiner is taking the company beyond its roots as a portal for recruiters & job seekers.  He’s added products to help businesses with their marketing campaigns & rolled out services for salespeople seeking new clients.  The number of users in China doubled to 8M.  The measures helped to boost 2014 revenue by 45% to $2.2B, which LNKD said would expand to $2.93-$2.95B this year.  The company also exceeded projections for the Q4, with EPS excluding certain costs at 61¢ & revenue up 44% at $643.4M.  Analysts estimated 53¢ on sales of $617M.  All 3 business segments reported increased sales.  Revenue from the core service that helps recruiters & companies find job candidates gained 41% to $369M.  Marketing Solutions, a tools for advertisers, rose 56% to $153M & the premium subscription segment grew 38% to $121M.  The stock jumped 43 (13%).  If you would like to learn more about LNKD, click on this link:

LinkedIn 2015 Profit Outlook Tops Estimates on New Products

LinkedIn (LNKD)

The good report on jobs was already baked into the market, so it did not have much influence.  There was also a reminder that average hourly earnings still lag the growth in jobs.  The intl scene remains touchy with the war in Ukraine showing no sign of ending soon & the unrest in the MidEast is worrisome.  Stocks are up more than 700 this week, they need a chance to pause & take a rest.

Dow Jones Industrials

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