Stocks Take Jobs-Report Disappointment in Stride
The much-anticipated August jobs report wasn’t much to crow about.
© Provided by Kiplinger
The Bureau of Labor Statistics revealed Friday that U.S. nonfarm payrolls expanded by just 235,000 last month – while Kiplinger had forecast a “hiccup” in hiring because of the Delta COVID variant, economists still had set a high bar of 720,000 jobs added.
The unemployment rate did tick lower, to 5.2% from 5.4% in July, matching estimates, and year-over-year wage growth of 4.3% was higher than expected. Still, the widely held belief entering Friday was that a strong headline job-growth number would have prompted the Federal Reserve to announce the tapering of its bond purchases later this month, but “that is no longer likely,” says Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
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“Instead, the Fed is going to need to wait to see further improvement in the job market and may not be able to announce their taper plans until the November meeting,” he says.
Rick Rieder, BlackRock’s chief investment officer of Global Fixed Income, points out a number of factors that might have played a role in dragging down the August data, including Delta-variant uncertainty, expanded unemployment insurance benefits and parents still tending to children who weren’t yet back in school.
“September data will be fascinating to examine, in terms of how these things potentially transition (UI benefits ending, Summer weather cools, hospitalizations potentially abate, children return to school, etc.) and how quickly the momentum toward full employment accelerates again,” he says.
Investors, weighing a significant slowdown in labor momentum but potentially a few months more of maximum market stimulus, settled for inertia.
The Nasdaq Composite (+0.2% to 15,363) modestly advanced to another fresh high thanks to the technology sector’s (+0.4%) leadership Friday. The S&P 500 recorded a marginal decline off yesterday’s highs to 4,535, while the Dow Jones Industrial Average declined a mere 0.2% to 35,369.
And a reminder: The stock market is closed on Monday, Sept. 6, in observance of Labor Day.
Other news in the stock market today:
- The small-cap Russell 2000 retreated 0.5% to 2,292.
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