Posts Tagged ‘non-farm’
Smart Investing Daily – Anticipate a Weaker-Than-Expected Jobs Report
Thursday, 05 May 2011
Recently the financial stock market has been slow to react to anything. Events and data that would normally get a big reaction from the markets have had minimal effect. Even the killing of the most wanted man on Earth did little to influence U.S. stocks.
That calm trend may be about to change…
What News Matters for the Financial Stock Market?
All news, economic data and corporate announcements such as earnings reports have some influence on the financial stock market. A successful investor forms opinions about the economy and the companies he or she invests in based on all kinds of news. But an investor also needs to be aware of what news the financial stock market uses.
Think of the market as a telescope looking ahead about four to 12 months. Because of this “forward view,” we use the market as a leading indicator of strength of the economy.
Even though the stock market looks forward, there are checkpoints to make sure it is not getting ahead of itself or that it has gone far enough! The checkpoints are news reports and economic data. If these are not meeting expectations, the markets can correct.
Different news matters at different times. But one major checkpoint may need to really step up the pace, if the financial stock market is going to continue higher.
(Investing doesn’t have to be complicated. Sign up for Smart Investing Daily and let me and my fellow editor Sara Nunnally simplify the stock market for you with our easy-to-understand investment articles.)
The Employment Situation
The unemployment rate, though important, is considered a lagging indicator of economic health. This means that the economy could be improving and the unemployment rate might be slow to respond.
Remember earlier I mentioned that the financial stock market is like a telescope? Well, you can also think of it as a rubber band. When the market moves higher and economic conditions improve, the tension on the band decreases. But when the market has been Read more
Technical Levels, Meet Non-Farm Payrolls
by Jared Levy on June 3, 2010
The short-term fate of S&P 500 (and the rest of the market, for that matter) face some relatively high expectations for non-farm payroll jobs tomorrow. The consensus among analysts is for the addition of more than 500,000 jobs, but I am seeing indications actually closer to 520,000. As I stated yesterday, this would be the largest monthly addition of jobs in the 10 years of data that I have reviewed. The estimates have actually gone up since earlier in the week.
In yesterday’s blog, I noted the lack-luster BLS metropolitan employment and unemployment report that was released earlier this week. In addition to that report, ADP said Wednesday that 55,000 private sector jobs were added in May, about 50% of what analysts were expecting.
Several sources have pointed out that about 150,000 jobs will be coming from the 2010 census hiring, which, of course, is temporary. So in reality, if you back out the 150,000, you’re left with more than 350,000 “real” jobs added. From a statistical standpoint, the chances do not look good with both the BLS and ADP reports showing shortfalls.
Granted, there have been large divergences and even some contradictions over the years between ADP numbers and the actual jobs number. One thing you can count on is volatility (in either direction). Historically, on average, the release of non-farm payroll data has added volatility not only to the equity markets, but to the FX and credit markets as well.
What is even more interesting is that the S&P closed today just a couple dollars below its 200-day simple moving average (SMA) of 1,106.25. The index’s 20-day SMA is just a couple dollars higher than the 200-day, coming in at 1,111.55.