Thursday's sudden jolt of volatility hasn't worked its way out of the market yet, but the hungry selling did subside somewhat Friday in the wake of a heartening improvement in America's employment data.
The Labor Department reported that nonfarm payrolls came in at a better-than-expected 1.37 million for August, and that unemployment dropped to 8.4% from 10.2% in July.
"A drop in the unemployment rate to single digits … is a psychologically meaningful threshold to breach," says Rick Rieder, BlackRock's chief investment officer of global fixed income.
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That had little effect early in Friday's session, but bulls chipped away at the losses during the afternoon to help the major indices close at much more modest declines. The Dow Jones Industrial Average, which dropped by as much as 2.2%, finished off 0.6% to 28,133.
Other action in the stock market today:
- The Nasdaq Composite, which was as much as 5% lower, ended down 1.3% to 11,313.
- The S&P 500 declined 0.8% to 3,426.
- The Russell 2000 finished 0.6% to 1,535.
A quick reminder: Labor Day, observed on Monday, Sept. 7, is a stock market holiday. It will be followed by a thin but interesting earnings calendar that includes several interesting momentum plays.
A Little Relief, Not a Rally Starter
Perspective here is everything. The jobs report represents a positive trend, but it also doesn't signal that the economy is out of the woods.
"The number of permanent job losers increased by 534k to 3.4 million; this measure has risen by 2.1 million since February. This can overhang the economy for some time," says Gene Goldman, chief investment officer at Cetera Investment Management, a broker-dealer network encompassing more than 8,000 advisors and $250 billion in assets. "Unfortunately, the next three months may not be as promising, as we have seen large numbers of layoffs recently announced, pandemic assistance expires October 1st for many companies (such as airlines), and census workers will be let go at the end of this month."
"Great perspective is required when situating this data in proper context," Rieder adds. "The unemployment rate is still resting too close to double digits, and many businesses will not recover their footing for years to come, if ever."
Not to mention, corporate bankruptcy filings, while slowing, continue to mount.
That's not to say that the sky is falling, but it might be time to take a few profits in case we're in for more September volatility. Wall Street's analyst community, typically bullish in nature, is warning about these nine stock picks; most of them have rocketed well past 12-month targets, implying that some mean reversion lower is in order.
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$177 Million AT&T Settlement Announced — Are You Eligible for a Payout?Millions of current and former AT&T customers may be eligible for payments after two 2024 data breaches exposed personal information.
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What Tariffs Mean for Your Sector ExposureNew, higher and changing tariffs will ripple through the economy and into share prices for many quarters to come.
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How to Invest for a Fall Interest Rate Cut by the FedA lot can happen between now and then, but the probability the Fed cuts interest rates in September is back above 80%.
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Are Buffett and Berkshire About to Bail on Kraft Heinz Stock?Warren Buffett and Berkshire Hathaway own a lot of Kraft Heinz stock, so what happens when they decide to sell KHC?
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How the Stock Market Performed in the First 6 Months of Trump's Second TermSix months after President Donald Trump's inauguration, take a look at how the stock market has performed.
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If You'd Put $1,000 Into Berkshire Hathaway Stock 20 Years Ago, Here's What You'd Have TodayBerkshire Hathaway is a long-time market beater, but the easy money in BRK.B has already been made.
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If You'd Put $1,000 Into Procter & Gamble Stock 20 Years Ago, Here's What You'd Have TodayProcter & Gamble stock is a dependable dividend grower, but a disappointing long-term holding.
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My Three-Day Rule for Investing: And If it Applies NowStock Market I've seen a lot in my career. Here's what I see now in the stock market.
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Is It Time to Invest in Europe?Stock Market Europe is being shaken out of its lethargy, militarily and otherwise, by Donald Trump's changes in U.S. policy. Should investors start buying?
