A much more robust jobs number than had been anticipated stunned market participants this morning. Instead of estimated 200,000-250,000 new jobs created in July, there were 528,000 new jobs created. The unemployment rate is at 3.5% and average hourly wages come in hotter than expected up 5.2% year over year. So, for the moment the jobs market remains strong and that is causing some angst in the credit markets as well as the stock market. We mentioned that good news like this jobs number might actually be bad news for stocks and that was the case at the open. But as the trading session wore on stocks recovered and closed mixed for the day. The bond market on the other hand continues to be whipsawed as the narrative that the Fed’s hawkishness might be easing, turned into the Fed will be emboldened by this morning’s strong jobs report and move even more aggressively on rate hikes. After being convinced that the Fed would only go 50 basis points in September now the markets are pricing in 75 to 100 basis points in September and maybe more before year end. I think next week’s inflation data will be even more important in the Fed narrative, but we will see.
As for today, by the close the Dow Jones Industrial Average was up 76 points to finish the day at 32,803. The S&P 500 was down 6 points to close at 4,145. The Nasdaq Composite Index was down 63 points to close at 12,657. Gold was down $15 to trade at $1,791 per ounce, while oil was down $.27 to trade at $88.27 per barrel WTI.
Today’s jobs number definitely caught the attention of investors. Let’s see how the markets handle the reports on inflation next week. Stay tuned.
Have a great weekend everyone.