On Friday, stocks fell on a weaker-than-expected jobs report. But losses were mild on the major indices, with the Dow industrials off 0.2% while the S&P 500 fell 0.3% and the Nasdaq lost 0.3%. However, the Russell 2000, which focuses on smaller-cap stocks, fell 0.8%.
Friday’s jobs report from the Labor Department showed an increase of 156,000 jobs in September, which was slightly below expectations, but not weak enough to stop predictions that the Federal Reserve will raise rates sometime before December 31. Weak stocks with a high dividend yield were a focus of sellers: The utility sector of the S&P 500 fell 3.8%, and the real-estate sector lost 5.3%. Both are examples of sectors composed of stocks with higher-than-average yields.
Federal-funds futures, on Friday, showed a 66% chance of a rate increase by year-end.
Also on Friday, profit-taking accounted for some declines in commodities. On Thursday, WTI crude oil rose to over $50 per barrel, but on Friday fell 1.2% to $49.81 per barrel after the Russian energy minister said that it was unlikely that an agreement to cut production or place a lid on it would occur this year. A consensus appears to be forming that oil will fall to the mid-$40s rather than continue to advance above $50.
At the close on Friday, the Dow Jones Industrial Average fell 28 points to 18,240; the S&P 500 lost 7 points at 2,154; the Nasdaq closed at 5,292, down 14 points; and the Russell 2000 fell 10, closing at 1,237. The NYSE’s primary exchange traded 950 million shares with total volume of 3.5 billion shares. The Nasdaq crossed 1.6 billion shares. On the Big Board, decliners outpaced advancers 2.3-to-1, and on the Nasdaq, decliners were ahead by 1.8-to-1. Blocks on the NYSE fell to 7,022 from 8,203 on Thursday and over 8,000 one week ago.
For the week: The DJIA fell 0.4%, the S&P 500 lost 0.7%, the Nasdaq fell 0.4% and the Russell 2000 fell 1.2%.
One of the least-recognized charts that should be a highlight of the week is the Dow Jones Transportation Average’s move higher. The increase only had to exceed a high that is higher than the 8,109 closing high in order to confirm its own uptrend. And since the Dow industrials have been in a bull trend since at least August, we now have our double confirmation.
Conclusion: Yes, the Dow Theory has confirmed that a bull market persists. However, corrections within the advance could, and probably will, rattle investors, since violent adjustments are all part of trading and investing in stocks during periods of crisis.
However, since the uptrend has been confirmed by several sources, including my 17-month moving average of the S&P 500, I am confident that whatever occurs before the year ends, the long-term trend is up. Meanwhile the near-term impact on both stocks and commodities will no doubt be the subject of a series of currency changes that may create some spectacular whipsaws.
Savvy investors will only buy for the long term, when others are terrified, and sell when others are overly optimistic.
So what else is new!?
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
