Skip to main content
  1. News
  2. Business & Finance
  3. Stock Market

Weekly market recap: Labor market home run

See also

Overview

More Photos

For the week ending May 2, 2014, the labor market blew past estimates in April when the Employment Situation reports were released Friday, beating estimates handily and raising the question that this may be a weather related rebound. And, the Fed released its FOMC meeting statement with no surprises, as $10 billion were evenly cut from Treasuries and mortgage-backed securities.

Growth in the labor market made headlines on both fronts: the Jobs Report listed 288,000 new nonfarm payroll jobs (273,000 private sector; 15,000 public sector) vs. an estimated 215,000; and the Unemployment Rate fell to 6.3 percent, which is well below the estimate of 6.6 percent. Clearly the labor market is improving; but to determine if this is simply a rebound from bad weather, the Fed will be looking more closely at next month's reports. The low first quarter GDP figure of 0.1 percent growth is also blamed on bad weather.

There were no surprises from the Fed's FOMC meeting statement as it continues its taper of $10 billion. "In sum, the recent economic data -- labor markets, housing, manufacturing, etc… -- have provided no reason for the Fed to stray from its course established earlier this year of gradually tapering bond purchases and offering assurances that interest rates will stay low and accommodative policies will remain in place just in case the numbers start to slip." It is interesting to note that there were no dissents.

On the earnings front, hundreds of companies reported this past week with positive results. The standouts: Merck, Sprint, and Ameriprise Financial beat estimates.

In The News

The good news on Friday was offset by escalating violence in southern Ukraine. The crisis reached a new peak as Ukrainian security forces "launched their most intensive effort yet to try to dislodge pro-Russian separatists, who have reportedly seized a number of government buildings in nearly a dozen cities and towns." Reports indicate deadly street fighting, downed Ukrainian government helicopters, and 31 people dead from a fire started at a trade union building.

A U.S. jury on Friday ordered Samsung Electronics to pay Apple $119.6 million. This figure is far less than Apple was seeking in their mobile patent litigation, which has been ongoing for three years. "Though this verdict is large by normal standards, it is hard to view this outcome as much of a victory for Apple. This amount is less than 10 percent of the amount Apple requested, and probably doesn't surpass by too much the amount Apple spent litigating this case."

Next Week

After a very poor first quarter, recent monthly economic data show a stronger second quarter ahead. Both manufacturing and housing continue to improve.

The focus next week in the U.S. will be on the non-manufacturing side with reports from Markit and ISM. And the Fed will be watching labor market data from the JOLTS report including job openings, hires, and separations.

Globally, the Reserve Bank of Australia, the Bank of England, and the European Central Bank will be releasing their monetary policies. Composite PMIs for April along with merchandise trade and industrial production data will be released.

We are expecting volatility spikes to continue next week as the situation in the Ukraine unfolds. As the Ukrainian presidential elections near, we are expecting the Ukraine crisis to worsen, possibly initiating a big adjustment in the markets.

Market Gauge

Year-to-date the markets are mixed: Dow -0.4%; S&P500 +1.8%; Nasdaq -1.3%.

The Markets for the past week were: DJIA up 0.9%; S&P500 up 1.0%; Nasdaq COMP up 1.2%.

Commodities (ETFs) for the past week were: Gold (GLD) down -0.29%; Silver (SLV) down -1.32%; Oil (OIH) down -0.42%; Dollar (UUP) down -0.33%; 30-yr Bonds (TYX) dropped 8 basis points to 3.37%.

The VIX this past week (a measure of market sentiment and volatility) dropped to 12.91% due to positive earnings and excellent labor market reports.

Top Headlines

To view details of headlines, go online to CNBC.

In the U.S.: Hiring rebounds but more gave up looking; Payrolls jump in April as thaw hits; What’s the real unemployment rate?; Factory orders fall short of forecasts; What millennials don't know about the job market; Buckle up! Economists turn negative on GDP growth; Treasury official: College should be cheaper; US 1% captures greatest slice of income pie: OECD; US jobless claims jump—but so do spending, income; US manufacturing extends winning streak; Planned layoffs jump in April: Challenger; Why the US is losing leverage with Russia; Yellen: Small bank loan growth a good sign; Fed tapers another $10 billion despite slow growth; Yikes! US economy crawls in first quarter; Disappointing growth could boost Fed's dovish tones; US works to curb tax-driven business moves abroad; A blow for Obama on minimum wage hike; Midwest business index hits highest since October; US private job creation booms in April: ADP; China to overtake US economy; India trumps Japan; Why the slowdown in US economy may be temporary; Fed taper to cause 'severe recession': Economist; and Homeownership falls to 19-year low.

In Europe: Euro zone unemployment steady; RBS Q1 profit trebles to £1.6 billion; Pfizer offer ‘inadequate’: AstraZeneca; Last mango in Paris? EU bans imports; Pro-Russian rebels say Ukraine tries to retake town; Ukraine PM warns of ‘most dangerous 10 days’; Big Oil dollars flow into Ukraine, despite conflict; Wanna be in my gang: Is EU membership worth it?; Turkish police fire tear gas in May Day protests; Clothing group FatFace seeks $743M London listing; UK's Morrisons cuts more prices to combat discounters; Is this the most boring ad ever made?; Lloyds posts profit increase, sets TSB float date; IMF warns Ukraine on bailout if it loses east; Is sterling punching above its weight?; Portugal to exit massive bailout without backstop; Dolce & Gabbana sentenced to 18 months in jail; GE's Immelt: Alstom deal makes us $60B player here; Euro zone inflation rises, pressure remains on ECB; IMF slashes Russia forecast, warns of outflows; Ukraine's east slipping from government's grasp; Rare Jewish scripture sells for record $3.8M; BNP Paribas profit beats, warns of legal charges; and Co-op Bank review: Downfall due to Britannia takeover.

In Asia: Japan’s jobs market is getting tighter; Are Hirai's days as Sony CEO numbered?; Last mango in Paris? EU bans imports; Lippo founder: US property looks attractive; Report on missing Malaysia plane reveals confusion; Sony drops to 6-week low after cutting guidance; Why Nike might move production out of China; Japan household spending jumps, jobs market improves; Shanghai Tang founder: I'm a 'tyrant' who gets things done; Why Alibaba probably won't take the US by storm; China overtaking the US economy, but hold on ...; Fake Viagra? Inside North Korea's growing economy; Sony slashes profit forecast by nearly 70%; Is April's best-performing currency set for further gains?; China plans crackdown on iron ore import loans; China official PMI rises slightly to 50.4 in April; Three killed in China train station attack; Why Sony desperately needs to innovate; After longtime ban, Xbox One to go on sale in China; Singapore's biggest bank beats profit expectations; HTC chief: Our big problem in smartphone war; Markets show growing unease over Abenomics; OCBC well positioned to cope with headwinds: CEO; and China to overtake US economy; India trumps Japan.

Weekly Review

To see the week in review, go to the Econoday calendar.

On Monday, despite escalating violence in Ukraine and with merger & acquisition talk between Pfizer and AstraZeneca, the Dow rose 0.5% to 16,448.

On Tuesday, with strong earnings from Merck and Sprint, the Dow rose 0.5% to 16,535.

On Wednesday, with no surprise from the FOMC and despite first quarter GDP at 0.1% (blamed on bad weather), the Dow rose fractionally to 16,580.

On Thursday, despite strong manufacturing and consumer sector reports, the Dow dropped fractionally to 16,558.

On Friday, with the escalating Ukraine crisis offsetting excellent labor market reports, the Dow dropped fractionally to 16,512. Gold rose $10 to $1,300.

Next Week's Calendar

To see what's on the calendar for next week, go to the Econoday calendar.

The economic calendar for next week is light: on Monday – ISM Non-Mfg Index; on Tuesday – International Trade; on Wednesday – Weekly EIA Petroleum Status Report, Productivity and Costs, Janet Yellen speaks; on Thursday – Weekly Jobless Claims, Janet Yellen speaks; and Friday – JOLTS.

If the Markets move down, stay on the side lines or consider Contra ETFs. For Option players, selling premium is advised.

For more information about options, see the 'Suggested by the author' links below.

To the Charts

The following ETFs (DIA, SPY, QQQ) provide a technical review of the Market (and are also excellent Option trading vehicles). Represented are the Dow Industrials (DIA), S&P500 (SPY), and Nasdaq 100 (QQQ).

The Charts for each include views for Monthly, Weekly (including Price Channels), and Daily (including monthly Pivot Points) with MACD and Stochastic indicators. The Pivots are: white for central pivot point; yellow for R1 and S1; magenta for R2 and S2; red for R3 and S3.

DIA

The Dow Industrials (DIA) closed up at 164.75. If the DIA drops, then the next level of support will be at 159.88 (weekly chart); the next level of major resistance is 166.06 (weekly chart).

The monthly chart indicates a bullish posture (up Arrow) with the MACD positive but weakening, and the Stochastic moving up above the overbought area.

The weekly chart indicates a bearish posture (down Arrow) with the MACD positive and strengthening, and the Stochastic moving up at the overbought area.

The daily chart indicates a bullish posture (up Arrow) with the MACD positive but weakening, and the Stochastic moving up above the overbought area.

SPY

The S&P500 (SPY) closed up at 188.06. If the SPY drops, then the next level of support will be at 181.31 (weekly chart); the next level of major resistance is 189.70 (weekly chart).

The monthly chart indicates a bullish posture (up Arrow) with the MACD positive but weakening, and the Stochastic moving up above the overbought area.

The weekly chart indicates a bearish posture (down Arrow) with the MACD positive and strengthening, and the Stochastic moving up below the overbought area.

The daily chart indicates a bullish posture (up Arrow) with the MACD positive but weakening, and the Stochastic moving up above the overbought area.

QQQ

The Nasdaq 100 (QQQ) closed up at 87.49. If the QQQ drops, then the next level of support will be at 83.28 (weekly chart); the next level of major resistance is 91.36 (weekly chart).

The monthly chart indicates a bullish posture (up Arrow) with the MACD positive but weakening, and the Stochastic moving down above the overbought area.

The weekly chart indicates a bearish posture (down Arrow) with the MACD negative but strengthening, and the Stochastic moving up above the oversold area.

The daily chart indicates a bullish posture (up Arrow) with the MACD positive and strengthening, and the Stochastic moving up at the overbought area.

Advertisement

News

  • Gaza school shelled
    Israeli airstrikes topple a school in Gaza suspected of housing rockets; dozens killed
    Video
    Video
  • Ebola outbreak
    An American with Ebola virus died shortly after boarding three planes
    World News
  • Why dogs smell butts
    Researchers figure out why dogs like to smell each other's butts
    Pets
  • Time to stop tanning
    The surgeon general advises us not to tan as melanoma cases are on the rise
    Health News
  • Zimmerman lands dream job
    George Zimmerman lands his dream job as a security guard at a gun/motorcycle shop
    Headlines
  • 10 smartest states
    Here are the 10 most educated states in the U.S., did yours make the cut?
    US News