Stocks Continue to Experience a Bumpy Ride
Stocks in the US started the trading session in the black after a weaker than expected non-farm payroll number eased interest rates, and allowed stocks to rally. Investors were looking for a much stronger number in line with the ADP employment report, the ISM manufacturing employment sub-index and the Challenger job cuts report. For the week the S&P 500 index closed up 0.6%, the Dow Industrial Average closed down 0.20%, and the Nasdaq 100 close up 1.03%.
Friday’s employment report surprised markets participants producing 74,000 jobs compared to the 200,000 expected by economists. Consensus estimates actually rose over the past two trading session after ADP reported that private payrolls increased by 238,000 jobs in December. The household survey, which a separate survey taken by the Department of Labor, showed that the unemployment rate dropped to 6.7% versus the 7% reading for the November series.
Private sectors jobs increased by 87,000 in December. The reduction in the unemployment rate came from a fall in the labor participation rate which declined to 62.8%, which is a new 36-year low. Nearly 340K people walked away from the job market in December. The average workweek declined to 34.4 from 34.5 in November, while average hourly earnings remained unchanged.
Sears’ (NASDAQ:SHLD) shares plunged nearly 14% prior to the open, after the retailer said FQ4 same-store sales dropped 7.4% year over year and it warned that it would make a loss per share in the period of $2.01-2.98, way below consensus of -$0.20.
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