An unhealthy market remains a place to avoid. Indexes gapped down at the open and stayed firmly negative all day as bulls never really made an attempt to show up ahead of the holiday weekend. The S&P 500 1.53% and the NASDAQ 1.05%. China has been on a 2 day holiday and has been a driver of the market so traders won’t be able to react to whatever China does Monday due to Labor Day. So it seemed many were reluctant to bother. The S&P 500 was down 3.4% for the week; it’s second worst week this year.
Fun fact: The S&P 500 had its sixth decline exceeding 1% in 12 days. Prior to that there’d been 10 such declines since January.
On the economic front we had a worse than expected employment figure but often that has led to big bounces in the market because a lot of market players actually like weaker than expected data as long as it is not really bad as it means the Federal Reserve will continue unprecedented support. But that gameplan didn’t play out today.
The August nonfarm payrolls report showed that 173,000 jobs were created, missing expectations of 220,000. The unemployment rate fell more than expected to 5.1%. Keep in mind, in America, when a person gives up looking for a job for 6 months he/she is no longer “unemployed”. We’ve had vast amounts of our population fall out of the labor force this way thus depressing the unemployment rate far below what it would be if those people were still on the radar. The labor force participation rate remained mired near its lowest level since the late 1970s at 62.6%. On a positive front the prior 2 months were revised up a bit with June moving from 231,000 to 245,000 and July going from 215,000 to 245,000.Continue reading