This blog gives investors more financial information for very smart investing!
Friday, July 8, 2016
Markets rise on June jobs report
Dow shot up 170 (going over 18K), advancers over decliners 7-1 & NAZ rose 62. The MLP index was fractionally higher in the 312s & the REIT index added 4+ to the 365s (record high territory). Junk bond funds crawled higher & Treasuries were little changed even though stocks rallied. Oil slid back after earlier gains (see below) & gold was also lower.
America's job market stirred to life in Jun as payroll growth
accelerated by the most since Oct after a 2-month lull, assuaging
fears of broader cutbacks by companies. Payrolls climbed 287K, exceeding the highest estimate after a revised 11K gain in May, according to the Labor Dept. The forecast called for a
180K increase. The jobless rate rose to 4.9% as more people
entered the labor force & wages advanced less than projected. The figures will help reassure Federal Reserve policy
makers that companies are staying the course on hiring in the face
of weaker profits & overseas developments such as Britain's vote to
leave the EU. Even with the outsized advance, job
growth over the last three months averaged 147K, down from almost
200K in Q1, a sign of moderation as the economy
approaches full employment.
Payrolls in leisure & hospitality
registered the biggest gain since Feb 2015, health care providers
took on the most workers since Oct & factories added the most jobs
in 5 months. Jun payrolls were
boosted by the return of 35K striking workers at Verizon
(VZ). The
unemployment rate increased from 4.7% in May. The
labor force participation rate, which indicates the share of
working-age people who are employed or looking for work, crept up to
62.7% from 62.6%. The underemployment rate dropped to 9.6%, the lowest since
Apr 2008, from 9.7%, reflecting a slump in the number of people
working part-time for economic reasons. 5.8M workers, the
fewest since Oct, were in part-time jobs but wanted to be employed
full time. Wages improved modestly, with
average hourly earnings climbing 0.1% from a month earlier & the
year-over-year increase was 2.6%, less than the 2.7% forecast. The average work week for all workers held at 34.4 hours. Factories
increased payrolls 14,K after a 16K decline the month before,
the latest indication that the industry is stabilizing after damage
wrought last year by a strengthening $ & plunging oil prices.
Employment at construction companies was unchanged after falling in May.
Oil trimmed its biggest weekly decline in 3 months as investors
weighed the largest drop in US output since 2013 & a jump in
payrolls against a smaller-than-expected stockpile decline. Futures rose as much as 1.8%, bringing the weekly
loss to 6.4%. Prices lost 4.8% yesterday after gov
data showed crude stockpiles fell 2.2M barrels last week, a
smaller drop than forecasts & industry data suggested. US production
slumped 194K barrels a day (2.3%).
Oil
has traded between $45-51 a barrel in the last month after almost
doubling from a 12-year low in Feb. The recovery has prompted producers to
begin returning drilling rigs to service, leading to speculation the
decline in production will slow. Crude production in the US tumbled to 8.43M barrels last week, the lowest since May 2014, according to the EIA
report. The number of active oil rigs in the US has increased in 4
of the last 5 weeks. Explorers have
idled more than 1K oil rigs since the start of last year. Supplies have fallen from an 87-year high of 543M
barrels in the last week of Apr.
McDonald's, a Dow stock & Dividend Aristocrat, will book more than $200M in charges in
the Jun related to its planned sale of 4K restaurants to
franchisees by 2018. The $235M charge, which also includes some costs tied to
relocating its headquarters to downtown Chicago, would lower EPS by
about 20¢. The company, which had outlined they plans last year as
part of a financial push intended to appeal to investors, has targeted
$500M in general & administrative savings, mostly to be
realized by the end of 2017, saying that after the sales, 93% of
its locations would be owned by franchisees. The company ultimately
wants to increase that number to 95%. MCD is slated to report results on Jul 26. The stock went up 66¢. If you would like to learn more about MCD, click on this link: club.ino.com/trend/analysis/stock/MCD?a_aid=CD3289&a_bid=6ae5b6f7
The jobs report brought out buyers. However, the number of jobs created in Q2 is nothing to write home about. And sluggish income growth for households remains unimpressive. The jobs figure should not have any effect on Janet's thinking about raising interest. The growing chaotic mess from Britain leabving the EU gives her an excuse to postpone any increase rates. Earnings will be a big driver of stock prices next week.
...0.55 
No comments:
Post a Comment