Jobs needed, for US Markets
Three things were on the minds of investors last week – jobs, jobs, and jobs.
U.S. Stocks posted broad losses on Friday as investors digested a disappointing June jobs report that showed hiring virtually stalled last month. The Labor Department's report showed the U.S. economy created only 18,000 jobs, a fraction of the 120,000 that economists predicted. At the same time, the unemployment rate rose to 9.2% from 9.1%, rather than declining as hoped.
Interestingly, the government's employment report came as a sharp contrast to two better-than-expected reports released Thursday on the job market, which helped U.S. stocks rise sharply. Payroll processing company ADP said private jobs grew rapidly in June – a figure that was much higher than anticipated and more than four times higher than May’s numbers. (ADP measures only private jobs, while the Bureau of Labor Statistics measures both private and public sector jobs.)
So on Thursday, positive jobs reports were good for stocks, while on Friday, negative jobs reports were bad for stocks. Why is everyone so focused on the nation’s employment picture? Put simply, the U.S. is a consumption economy. When Americans spend money on things like cars, clothes, and eating out, our economy grows. When people don’t have gainful employment, they spend less, companies earn less, and slower economic growth ensues. For these reasons and more, the jobs picture commonly affects stock market performance.
In the weeks ahead, investors will shift their focus to the health of Corporate America as companies start reporting earnings for the second quarter. Many expect that strong earnings and outlooks will help compensate for weak jobs data, and will reinforce that the recovery is still progressing.
ECONOMIC CALENDAR: Tuesday – International Trade, FOMC Minutes Wednesday –Import and Export Prices, Ben Bernanke Speaks, EIA Petroleum Status Report, Treasury Budget
Thursday – Producer Price Index, Retail Sales, Jobless Claims, Business Inventories
Friday – Consumer Price Index, Empire State Mfg Survey, Industrial Production, Consumer Sentiment
HEADLINES:
Betty Ford, the former first lady whose triumph over drug and alcohol addiction became a beacon of hope for addicts and the inspiration for her Betty Ford Center in California, died at age 93 on Friday. Her death was confirmed to The Associated Press by Marty Allen, chairman emeritus of the Ford Foundation. The former first lady died at the Eisenhower Medical Center in Rancho Mirage. Other details of her death were not immediately available.
The last shuttle thundered into orbit Friday on a cargo run that will close out three decades of both triumph and tragedy for NASA and usher in a period of uncertainty for America's space program.
South Sudan became the world's newest country Saturday with a raucous street celebration at midnight. South Sudanese citizens, international dignitaries and the world's newest president are convening in the new country capital of Juba to celebrate the birth of a nation.
European Union President Herman Van Rompuy has called a meeting of top EU policy makers Monday to discuss plans for a second bailout package for Greece, EU officials said on Sunday. The gathering comes as Europe continues to struggle with a contentious issue: whether and how Greece's private-sector creditors should share the burden when the anticipated second aid package is doled out to the debt-burdened country.
