On Thursday we saw what happened when a momentum-driven stock rally hit the reality of crude oil eclipsing $106 a barrel — a mostly flat day for the market.
On Friday we saw what happened when another two-and-a-half-year high in crude oil is trumped by a decline in unemployment.
In other words, your guess as to what happens next is as good as anybody’s.
Stocks pushed modestly higher on Friday, with the Dow Jones Industrial Average hitting an intraday high for 2011 before settling back to gain only 57 points to 12,377.
The Nasdaq added 9 points to 2790 and the S&P 500 gained 7 points to 1332 — the S&P 500 is now within 1% of its closing high for 2011.
Whether you consider Friday’s jobs report as a thoroughly positive report, it’s without question that the data set a positive tone for the market. The economy added 216,000 jobs in March — above Wall Street expectations — and the unemployment rate fell to 8.8%.
Even the fine-printers who usually cite the oft-flattish (or worse) employment-to-population ratio as a reason to not get excited about the labor market (and rightfully so) had to admit that the 58.5% level is the economy’s highest since last September.
However, this rally clearly has a lot going for it, not the least of which is the ability to shrug off minor irritants of unpleasant news that one would objectively think could give investors pause.
The jobs report, for example, it doesn’t seem hugely positive that the data showed wages have basically not moved for two months — consult your recent food and energy bills for confirmation that this could be a problem for consumer demand down the road.
Economic recovery, OK, resurgent economic recovery? Well, not quite.
But investors also enjoyed the good fortune of a sweetened bid for NYSE Euronext (NYSE:NYX) giving financial stocks a lift on Friday, an overall favorable reaction to monthly automobile sales — Ford (NYSE:F) gained 1.7%, General Motors (NYSE:GM) climbed more than 4% — and let’s not forget, a first-day-of-the-month Friday after an end-of-quarter runup all week.
What to expect next week? One could objectively think that a tipping point in stocks will come if the trend in crude oil continues. But with all that has failed to stop the two-week rally, it doesn’t seem like an ideal time to fight the market.
