Friday was an interesting – and dare I say sort of bullish – day. Indexes were up strongly ahead of the 8:30 AM employment data as traders apparently expected status quo but then the data came out quite poorly. Futures screamed downward and we had a very poor open. However by mid day all those losses were erased and another wave of buyers came in late in the day. When weak opens are bought aggressively that is generally a good sign; let’s see if there is more of that next week.
“You did have the reversal, which was healthy,” said Qunicy Krosby, market strategist at Prudential Financial. “The initial reaction shows you that bad news that actually became bad news. … You could argue the market had a change of attitude, that bad news is good news, but I think this is the market probing and testing (the lows).”
Maybe we are back to “bad news = good news = MORE Fed.” The S&P 500 gained 1.43% and the NASDAQ 1.74%. Fed futures now have pushed out a rate hike from this year to March at the earliest. Recall, 4-5 months ago these were pointing to a September hike so it appears we may never get another hike ever since apparently the Fed may now only rate hikes in a perfect economy.
Few analysts could find any positives in the September jobs report, which showed the U.S. economy created 142,000 jobs, a number far below the expected 203,000. August and July figures were also revised lower by 59,000. Economists had been expecting the report to show 203,000 new jobs. Unemployment held at 5.1%; the participation rate plunged to 62.4, its lowest since October 1977. The total labor force fell to a 2015 low, losing another 350,000 people.