While nine out of 10 market pundits laid Friday’s rally at the foot of the April jobs report, it’s worth noting that stocks were headed for a lift even before trading began.
In short, after a four-day, 2.5% selloff, stocks were due for a bounce as Friday’s low-volume momentum traders took the helm.
The Dow Jones Industrial Average rose 55 points to 12,639, the Nasdaq gained 13 points to 2828 and the S&P 500 was up 5 points to 1340.
Not that the unemployment data didn’t provide a spark – immediately after its release, stock futures jumped and continued to provide an early push higher at the open. At one point, the rally had erased about half the week’s selloff.
Ultimately, however, there was too much working against a massive move higher on Friday, not the least of which was the jobs report itself, which appeared to be even more of a mixed bag the longer it was around to chew on.
While April’s addition of 244,000 jobs marked the third straight month of gains of more than 200,000, the decline in the employment-to-population ratio (not to mention a bump up in the straight-ahead jobless rate to 9%) and the relatively unchanged workweek hours suggests that demand for labor isn’t exactly burgeoning.
The other notable subtext, and not a positive one, is the continuing prime beneficiary status held by the over-55 age group in terms of job creation. Blacks, for what it’s worth, are at the opposite end of the spectrum, with the 51.5% employment-to-population ratio in April marking an all-time low.
However, one can’t necessarily speculate that stocks would’ve done a whole lot better had the jobs report been uniformly positive. This has been Commodity Deflation Week, and that theme largely continued – particularly with silver, which might as well be tin for how much people are now willing to pay for it. It slid below $36 on Friday – it was trading above $48 before the week started.
Oil also moved lower, with the price of crude falling below $98 a barrel. Interestingly, while this has generally meant good news for industries that stand to gain from lower fuel prices, the worry about diminishing lower demand seemed to be the bigger concern. Travel and tourism stocks fell – Priceline.com (NASDAQ:PCLN) was off 2.8% after a strong earnings report (Goldman downgraded the shares after the stock’s stellar run for the year-to-date), while Travelzoo (NASDAQ:TZOO) slipped 2.1%,
Similarly, recreational services stocks, which caught a big bid on Thursday, retreated. Royal Caribbean Cruises (NYSE:RCL) fell more than 3%, while Live Nation (NYSE:LYV) slipped 1.1%.
Stocks had their bounce on Friday, but the themes that took hold this week to drive the market lower are still very much in play.
