A Powerful Stock Market Rebound on Friday... & a special day tomorrow Hi Everyone, The stock market closed significantly higher on Friday, following a much better than expected October jobs report. The Dow rose 168, or 1.1%, to 15,762. The Nasdaq gained 62, or 1.6%, to 3,919 while the S&P 500 advanced 23, or 1.3%, to 1,771. Advancing issues outnumbered decliners by a more than 5-to-4 ratio on the NYSE, where volume was lighter than it was on Thursday, but still above average. Traders think that conflicting economic data led to ambivalence among investors. As one trader explained, A much better than expected jobs report at first hit the market hard as traders believed the news would influence the Fed to taper earlier than expected. However, the selloff reversed when traders responded to a worse than expected consumer sentiment number by buying equities. It might also be that more investors are optimistic following the jobs report, thinking that good news is good news because perhaps the economy can grow even with less Fed stimulus. And there are likely some market participants who believe improvements in the labor market and the economy are good things. And stocks likely recovered when investors looked more closely at the jobs report. Investors could have decided that, while many jobs were added, many were part-time or in low-paying segments like retail and hospitality. In addition, the 204,000 jobs that were added could actually be less if there is a revision later. Finally, the labor participation rate fell to 62.8%; its lowest level since March 1978, which indicates that workers are still feeling discouraged regarding their prospects. Stock prices probably reflect to a large extent the Fed stimulus, and all eyes will be on the Federal Reserve to determine when it will taper. However, a win is a win and the bulls were happy about that. It was great to see stocks soar once again on Friday, but the numbers still show some weakness in the economy. The employment report was solid with 204,000 new jobs created versus the 100,000 estimate, but that offset the rise in the unemployment rate to 7.3% versus last months 7.2%. It was a plus for the stock market, though, as we saw the bulls close out the week strong with the Dow up about a percent, the Nasdaq up a half of a percent and the Nasdaq down just a tad for the week. We are into that nether-world of November that is usually great for stock market returns, but the strange part about this year is that the September-October returns have been so good. Stocks as we have all seen have performed extremely well, and the thought of a Thanksgiving give back is not likely in the cards. This is the time of year for rallies, and that is likely to remain the type of market we will see. Earnings throughout the Fall supported this case so we will see what happens. (Earnings, overall, were up 5.6% from the prior quarter.) It is a big relief to have made it through earnings season without so much as a hiccup or two. This was a tough season to say the least, but earnings were not all that bad. The big concern was that the economy could not stand on its own, but strangely enough, it is somehow standing. Two or so trillion (yes, that is a T) Fed and Treasury dollars apparently had some sort of effect, so we will just have to go with that. Something worked, and it is hard to criticize that fact (at least until inflation kicks in big time). I heard the Maestro on the radio on Friday, and it appears he has a new book out about his term as the Master of the Universe. He spoke about bubbles and toils and troubles, but it sounded like a revisionist history from a guy who feels a tad guilty about a whole lot of bad policy. Recall that as the housing bubble bubbled, Greenspan said he saw regional froth, but no bubble. Thank you for the insight Mr. Greenspan. He is still obviously working on his legacy, but we could use some straight talk right now in a big way. Having survived October, we are in that sweet spot of the year for stocks. Will we see them rally as usual for the rest of the year, or will we see November and December take on a more October characteristic? We shall see, but it was amazing to see the stock market avoid the 2013 season by not acting like a typical October. That is ultimately bullish for stocks, and it is even more bullish for the prospects for stocks into the end of the year. Surviving October was a huge plus for the bulls, which is why we are so excited about the run toward the end of the year. With that said, November is here, and Thanksgiving is around the corner. That means family and friends, food, fun and football, and a fun-filled stock market that tends to go up. That is always a plus for the bullish camp, so lets sit back and enjoy the ride. On a heartfelt note, tomorrow is a day to remember and acknowledge the men and women who have defended and secured our way of life. Please take a moment to say a prayer for all of the men and women who have made tremendous sacrifices for the freedom that we enjoy each and every day. I can’t possibly imagine the pain and suffering that these soldiers and their families have endured. I know that I am always humbled by their bravery and dedication. Many thanks, Joe
Posted on: Mon, 11 Nov 2013 01:57:58 +0000
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