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Back You are here: Home Markets Markets Update US Commentary Stocks May React Positively To Weaker Than Expected Jobs Data - U.S. Commentary

Stocks Update

With traders reacting positively to the September jobs report, stocks are likely to move to the upside in early trading on Tuesday. The major index futures are currently pointing to a higher open for the markets, with the Dow futures up by 36 points.

The upward momentum for the markets comes as the employment report showed weaker than expected job growth, reinforcing expectations that the Federal Reserve will maintain its asset purchase program at the current pace for the foreseeable future.

The report said non-farm payroll employment increased by 148,000 jobs in September compared to economist estimates for an increase of about 180,000 jobs.

While the job growth in August was upwardly revised to show an increase of 193,000 jobs compared to the previously reported addition of 169,000 jobs, the increase in jobs in July was downwardly revised to 89,000 from 104,000.

The revisions to the two previous months reflect a net increase of 9,000 jobs compared to the previously reported numbers.

Despite the weaker than expected job growth, the unemployment rate dipped to 7.2 percent in September from 7.3 percent in August. Economists had expected the unemployment rate to come in unchanged.

With the unexpected decrease, the unemployment rate dropped to its lowest level since hitting 6.8 percent in November of 2008.

The September jobs report was originally scheduled for release on October 4th but was delayed as a result of the government shutdown.

Rob Carnell, chief international economist at ING, said "These figures certainly do not point to the marked improvement in the economic backdrop that some FOMC members want to see before starting the taper."

"There is no sign of tightness in the labor market, so the Fed will probably feel assured in keeping QE at current levels for some time yet," he added.

Among individual stocks, shares of Netflix (NFLX) are moving notably higher in pre-market trading after the video streaming service provider reported better than expected third quarter results and forecast fourth quarter earnings above analyst estimates.

Insurance giant Travelers (TRV) may also see early strength after reporting third quarter earnings that came in above expectations. The company also raised its share repurchase plan by $5 billion.

On the other hand, shares of RadioShack (RSH) are likely to come under pressure after the consumer electronics retailer reported a wider than expected third quarter loss.

With traders reluctant to make any significant moves following the strong upward move seen over the past several sessions, stocks showed a lack of direction throughout the trading day on Monday before closing roughly flat.

The major averages ended the day mixed, although they all closed near the unchanged line. While the Dow dipped 7.45 points or 0.1 percent to 15,392.20, the Nasdaq rose 5.77 points or 0.2 percent to 3,920.05 and the S&P 500 inched up 0.16 points or less than a tenth of a percent to 1,744.66.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Tuesday. Japan's Nikkei 225 Index crept up by 0.1 percent, while Hong Kong's Hang Seng Index ended the day down by 0.5 percent.

Meanwhile, the major European markets have all moved to the upside on the day. While the U.K.'s FTSE 100 Index is up by 0.5 percent, the French CAC 40 Index is up by 0.6 percent and the German DAX Index is up by 0.7 percent.

In commodities trading, crude oil futures are slipping $0.22 to $99 a barrel after falling $1.59 to $99.22 a barrel on Monday. Gold futures are climbing $12.80 to $1,328.60 an ounce. In the previous session, gold edged up $1.20 to $1,315.80 an ounce.

Among currencies, the U.S. dollar is trading at 98.23 yen compared to the 98.19 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.3725 compared to yesterday's $1.3681.

by RTT Staff Writer