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Weak hiring report clobbers stock market on Monday

New York Stock Exchange
New York Stock Exchange
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Monday was the first day of trading since the Department of Labor’s Bureau of Labor Statistics released its March non-farm payrolls report on Friday, when the markets were closed. The BLS report severely missed the expectations of a Bloomberg survey of economists, which had a median forecast of a 205,000-job increase. The actual headline number from the BLS report turned out to be 120,000. After a weekend of hand-wringing, investors were given the opportunity to act on their anxiety when Monday’s opening bell rang at 9:30. Within seconds, the Dow Jones Industrial average took a 130-point nosedive.

With the exception of Ryder System (R) Miami-based corporations saw their stocks make excellent gains on Monday, bucking the trend in the broader market.

Although Friday’s non-farm payrolls report announced a six-figure jobs increase, the number was so low that it might as well have been written in red ink:

Nonfarm payroll employment rose by 120,000 in March, and the unemployment rate was little changed at 8.2 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in manufacturing, food services and drinking places, and health care, but was down in retail trade.

Household Survey Data

The number of unemployed persons (12.7 million) and the unemployment rate (8.2 percent) were both little changed in March.

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The number of long-term unemployed (those jobless for 27 weeks and over) was essentially unchanged at 5.3 million in March. These individuals accounted for 42.5 percent of the unemployed.

Many commentators (including Jon Markman) took the disappointing jobs report as good news – out of belief that a stagnant job market will motivate the Federal Reserve to implement another round of quantitative easing. Some people just can’t give up that ghost!

The Dow Jones Industrial Average failed to recover from its 130-point nosedive on Monday, closing at 12,929 for a loss of exactly one percent. The S&P 500 declined by 1.14 percent to finish at 1,382. The NASDAQ Composite lost 1.08 percent to end the day at 3,047.

With the exception of Ryder System (R), Miami-based corporations had a great day on Monday. Carnival Cruise Lines (CCL) led the group, with a gain of 1.11% to close at 31.02. Royal Caribbean (RCL) rose by 65 basis points (0.65%) to finish at 28.07. Lennar (LEN) also advanced by 65 basis points (0.65%) to close at 26.42. Ryder System (R) declined by a dreadful 2.79% to end the day at 51.91.

The following companies will be playing “beat the number” on Tuesday, with the release of their quarterly earnings reports: Alcoa (AA), Standard Microsystems (SMSC) and Supervalu Inc (SVU). Good luck!

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