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Market Update

Far From a Firecracker of a Jobs Report – And Wall Street’s Okay With That

July 2, 2015

Not great. Just okay? Hard to find the right words for this much-anticipated economic report. It’s hard, too, to tell if the largely positive early reaction in the stock market and a drop for the dollar is based on the report’s upbeat details or its overall lukewarm result. You’ll recall that this bull market has accepted so-so data because it’s seen slowing down the Federal Reserve’s interest-rate response to an improving economy.

We did learn that the economy created 223,000 new jobs in June, according to government data. It’s a hiring pace largely in line with Street economist expectations and supports Street estimates for a pickup in Q2 economic growth from a wimpy start to the year. But the job report has weak spots. Wages were flat and job gains in the prior two months were reduced (more below). The report was released a day earlier than usual due to market and government closings on Friday for U.S. Independence Day.



In Wednesday’s Market Update, emphasis was on the 2075 line for the S&P 500 (SPX)—a familiar target for the bulls over recent sessions. SPX did close above 2075 at the end of that session, at 2077, a potentially bullish sign. Data source: Standard & Poor’s. Chart source: TD Ameritrade’s thinkorswim® platform. For illustrative purposes only. Past performance does not guarantee future results.

Jobs Report Details. The jobs report takes a little digging. The unemployment rate fell to 5.3% from 5.5%. That’s the lowest level since the spring of 2008, but it’s not always a straightforward result, as the math involved can impact percentage change. In this case, Labor Department officials say the decline is based on more than 400,000 people leaving the labor force. Employment gains for May and April were revised down by a combined 60,000, the Labor Department said. The government said 254,000 new jobs were created in May instead of 280,000. April's gain was cut to 187,000 from 221,000. The average hourly wage was flat in June, reducing the year-over-year increase to 2% from 2.3% in the prior month. Annualized gains in wages have stuck near 2% since 2012, MarketWatch notes.

Record Delivery for Tesla. Electric luxury car-maker Tesla Motors (TSLA) is an early gainer Thursday after saying it delivered a record 11,507 Model S vehicles in Q2. That’s up a whopping 52% from the year-earlier period. The number was well above the company's estimate of 10,000 to 11,000 units.

Coming Next Week: The post-holiday economic calendar next week is fairly thin: service-sector data, the Fed’s preferred look at job market openings, among a few other reports. The big release may come midweek when the Fed issues meeting minutes from its last gathering. That meeting shed some light on the expected timing for late-year rate moves but let's see if the minutes offer more detail. Next week also unofficially kicks off the next earnings round, a period that we know may be impacted by a stronger dollar’s blight for multinational profits.

Happy Birthday U.S.A. ! Have a safe and enjoyable holiday. 

Good trading,

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