quartermaster
August 9th, 2009, 04:38 AM
US jobs report spurs stocks
By Michael Mackenzie and Simone Baribeau in New York
Published: August 7 2009 13:52 | Last updated: August 7 2009 21:43
Stock markets on both sides of the Atlantic hit their highest levels in months on Friday after better-than-expected economic data in the US and Germany buttressed hopes for an economic recovery.
The US non-farms payroll report showed the economy lost 247,000 jobs in July, far below a median estimate of 320,000 jobs from economists surveyed by Reuters, while the unemployment rate slipped from 9.5 per cent in June to 9.4 per cent.
President Barack Obama hailed the news as a sign “we’re pointed in the right direction”, and investors responded by sending the S&P 500 up 1.34 per cent to close at 1,010.48, its highest level since early October.
“No longer should we have to discuss when the recession will end, but rather, what the recovery will look like,” said Joseph Brusuelas, director of Moody’s Economy.com.
In Europe, meanwhile, the FTSE Eurofirst 300 index reached a nine-month high, after Germany reported a un*expectedly large 7 per cent increase in exports, adding to the evidence of a “V-shaped” recovery in the continent’s biggest economy. Jörg Krämer, chief economist at Commerzbank, said the German exports boost was part of a “global phenomenon” that should end the debate over whether the country was vulnerable because of its reliance on exports.
The US jobs report was a blow to Wall Street bears who have argued that rising unemployment would eventually overwhelm good feeling generated by positive earnings reports from blue-chip companies.
“The bears have been hanging their hat on the poor employment picture, but job losses are running at a third of what we saw earlier this year,” said Jack Ablin, chief investment officer at Harris Private Bank.
Jim Paulsen, chief investment strategist at Wells Capital Management, said the rise of the S&P 500 above 1,010 was particularly significant for technical analysts – and potentially signalled a march to the 1,100 level.
The slowing pace of job losses was evident across broad swaths of the economy. The service sector lost fewer jobs in July than it had for 10 of the past 11 months, while the goods-producing sector lost fewer jobs in July than in any month since September. Payrolls increased in the automotive sector in July.
The optimism in the markets was tempered by the fact that the fall in the unemployment rate, which is based on a separate household survey, reflected a reduction of 422,000 people seeking employment. Another concern for investors was that trading volumes have been low. Analysts say that this could mean traders are bidding up stocks as they close out short positions – a potentially negative indicator for the long term.
Copyright The Financial Times Limited 2009
http://www.ft.com/cms/s/0/9b5ad536-834a-11de-a24e-00144feabdc0.html
Certainly promising news on the financial side, though stocks are certainly not analogous to general prosperity; in other news, AIG has also shown profits in its first quarter: http://www.ft.com/cms/s/0/2c230656-8373-11de-a24e-00144feabdc0.html?nclick_check=1
By Michael Mackenzie and Simone Baribeau in New York
Published: August 7 2009 13:52 | Last updated: August 7 2009 21:43
Stock markets on both sides of the Atlantic hit their highest levels in months on Friday after better-than-expected economic data in the US and Germany buttressed hopes for an economic recovery.
The US non-farms payroll report showed the economy lost 247,000 jobs in July, far below a median estimate of 320,000 jobs from economists surveyed by Reuters, while the unemployment rate slipped from 9.5 per cent in June to 9.4 per cent.
President Barack Obama hailed the news as a sign “we’re pointed in the right direction”, and investors responded by sending the S&P 500 up 1.34 per cent to close at 1,010.48, its highest level since early October.
“No longer should we have to discuss when the recession will end, but rather, what the recovery will look like,” said Joseph Brusuelas, director of Moody’s Economy.com.
In Europe, meanwhile, the FTSE Eurofirst 300 index reached a nine-month high, after Germany reported a un*expectedly large 7 per cent increase in exports, adding to the evidence of a “V-shaped” recovery in the continent’s biggest economy. Jörg Krämer, chief economist at Commerzbank, said the German exports boost was part of a “global phenomenon” that should end the debate over whether the country was vulnerable because of its reliance on exports.
The US jobs report was a blow to Wall Street bears who have argued that rising unemployment would eventually overwhelm good feeling generated by positive earnings reports from blue-chip companies.
“The bears have been hanging their hat on the poor employment picture, but job losses are running at a third of what we saw earlier this year,” said Jack Ablin, chief investment officer at Harris Private Bank.
Jim Paulsen, chief investment strategist at Wells Capital Management, said the rise of the S&P 500 above 1,010 was particularly significant for technical analysts – and potentially signalled a march to the 1,100 level.
The slowing pace of job losses was evident across broad swaths of the economy. The service sector lost fewer jobs in July than it had for 10 of the past 11 months, while the goods-producing sector lost fewer jobs in July than in any month since September. Payrolls increased in the automotive sector in July.
The optimism in the markets was tempered by the fact that the fall in the unemployment rate, which is based on a separate household survey, reflected a reduction of 422,000 people seeking employment. Another concern for investors was that trading volumes have been low. Analysts say that this could mean traders are bidding up stocks as they close out short positions – a potentially negative indicator for the long term.
Copyright The Financial Times Limited 2009
http://www.ft.com/cms/s/0/9b5ad536-834a-11de-a24e-00144feabdc0.html
Certainly promising news on the financial side, though stocks are certainly not analogous to general prosperity; in other news, AIG has also shown profits in its first quarter: http://www.ft.com/cms/s/0/2c230656-8373-11de-a24e-00144feabdc0.html?nclick_check=1