Today, the U.S. stock market seems convinced that the GDP and jobs numbers to be released tomorrow (third quarter GDP) and Friday (jobs for October) will show a weak U.S. economy that will increase the odds that the Federal Reserve will hold off any reduction of its $85 billion in asset purchases well into 2014.
The U.S. stock market got what it wanted in this morning’s September jobs numbers. The economy added a disappointingly low number of jobs in September, but the wage and hour figures were strong enough so that the economy does not look to be falling off a cliff
If, as the Federal Reserve keeps saying, the decision on when to begin tapering off the central bank’s $85 billion in monthly asset purchases is data dependent, then this morning’s data really doesn’t provide a signal. The third estimate on second quarter U.S. GDP came in much as expected and so did the weekly claims for unemployment numbers
With the markets in oversold territory, good numbers on initial claims for unemployment in the U.S. and improvements in the manufacturing sector in China and German were enough to power a bounce today
Initial claims for unemployment dipped to a weekly 320,000. Economists had been expecting 339,000. In this good news is bad news environment where the Fed has said that it is watching unemployment as a key measure in making a decision about when to reduce its buying of Treasuries and mortgage-backed assets, a lower figure for initial claims was enough to send stocks and bonds down
Recently bad news on the U.S. economy has been good news for U.S. stocks as equity markets have rallied on the belief that disappointing economic growth postponed the date on which the Federal Reserve would start to taper off its program of buying $85 billion a month in Treasuries and mortgage-backed securities. Not today, however. The economy added a very modest 162,000 jobs in July. That was less than the 188,000 jobs added in June
The strength is strong enough to keep alive talk that the Federal Reserve will begin to taper off its $85 billion in monthly purchases of Treasuries and mortgage-backed securities in September. But the weakness in the jobs numbers is weak enough to keep doubts alive about a September beginning to The Taper.
The good news from the U.S. economy came in the form of better than expected retail sales for May and better than expected initial claims for unemployment for the week ended June 8.
The jobs report for April wasn’t as bad as feared. The U.S. economy added 165,000 jobs in April. Economists surveyed by Bloomberg had expected to see 140,000 new jobs. But most of the jobs created were part time, leading to a fall in aggregate wages for the month–and that isn’t good news for consumer spending in the second quarter.
The week has begun with optimism that the housing recovery and consumer spending will continue to support decent U.S. economic growth. The week, however, ends with the Thursday, May 2, meeting of the European Central Bank and Friday’s report on U.S. employment growth. I wouldn’t be surprised to see stocks pause in midweek
