The Labor Department published its monthly careers document Friday and stocks surged. The acceptance of employees into the midst of companies has been occurring frequently, so much so that the economy at large has not seen such a gain of individuals getting up early and going to work and working all day and then going home since the last recession started. Historically, when unemployment goes down so do stocks, for numerous reasons so don’t get too anxious about investing in the markets if too several people find the jobs they have been looking for freaking ever. Put simply, don’t take out an installment loan to load up on stock just yet.
Gaining in first quarter careers and stocks
The U.S. joblessness rate dropped from 8.9 percent in Feb. to 8.8 percent in March, the lowest rate in two years, according to the Labor Department. This caused a rise in stocks. It was very clear. There was a 0.7 percent increase in the Dow Jones Industrial Average going up 87 points as a new high in 2011 of 12,406. There was also a 10 point increase, or 0.8 percent, to 1,335 in the Standard & Poor's 55. A 0.6 percent increase in the Nasdaq also happened. It went up 15 points to 2,796. There was a 216,000 increase in workers on U.S. payrolls in March after the month before gained 194,000. In November, unemployment rate was at 9.8 percent, which it has continued to drop from since making the biggest, since 1983, four month decrease. In the three months that ended with March, there was the first biggest first-quarter gain with a 5.4 percent increase since 1998 in the U.S.
Labor affects the market
Usually Wall Street is okay with layoffs occurring. This is because most investors believe a higher profit will come from smaller payrolls. When everyone was losing jobs in January 2009, it was good for the stock market. It went up. In fact, in the past 60 years the stock market has performed better on average when the United States unemployment rate was higher rather than lower. Yearly the joblessness rate was over 6 percent, there were huge increases in the S&P 500, reports Ned Davis Research. It would go up 13.5 percent. Joblessness beneath 4.3 percent would mean a smaller increase. On average, the S&P 500 increase would be 2.1 percent. MarketWatch states that in 2009, Ed Clissold of Ned Davis Research pointed out traders will do better with high joblessness because the stimulus the federal government puts out will help them on top of lower costs and high profit. Stock prices can have changed based on job cuts by the time unemployment news comes out, which ! means traders can sell and make some money.
Traders hope job information doesn’t get too good
Friday's good labor market information helped stocks increase. More than likely this was because there was not too large of a stock decrease. Most traders are more worried about the short term than the long term. Traders think the Federal Reserve bond purchasing program, QE2, has helped the stock market. There are several traders with fixed-incomes that are worried about the labor markets. They worry that in June the Fed won’t purchase bonds anymore as the QE2 program will end. The good stock might not be good for everybody not involved in Wall Street which has been shown as Americans struggle and Wall Street bonuses increase. If more Americans keep finding work, the markets could change their tune.
Articles cited
Associated Press
finance.yahoo.com/news/Stocks-rise-after-apf-653435655.html?x=0&sec=topStories&pos=1&asset=&ccode=
Market Watch
marketwatch.com/story/bad-news-on-job-front-doesnt-have-to-be-bad-for-stocks
CNN Money
money.cnn.com/2011/03/31/news/economy/thebuzz/index.htm
No comments:
Post a Comment