There were a lot of waves in Thursday's trading and the equity market moved in rudderless fashion, turning this way and that, yet basically getting nowhere by the time the closing bell rang.

Days like that leave things wide open for analytical interpretation (er over-analysis).  To wit, some will say it was encouraging that the market closed flat despite a warning from Moody's that it could put the U.S. on review for a downgrade if progress isn't made on increasing the debt limit.  Others will say it was disappointing that the market didn't have any bounce in its step after a 2.3% decline on Wednesday.

We'll simply say that conviction was lacking, because the scope of Wednesday's losses and the specter of today's employment report forced a mandated rest period for market participants.

There is no rest for the weary today, however.

Markets are buzzing in response to the employment data and they continue to ruminate about the possibility of Greece getting a new bailout package soon, otherwise known in these parts as The Hangover Part II.

All things considered, the May employment report is the clear focus this morning and, all things considered, it left a lot to be desired. 

Total nonfarm payrolls rose just 54,000 (Briefing.com consensus +169,000) while private sector payrolls rose 83,000 (Briefing.com consensus +180,000).  Both numbers were well below averages for the prior three months, which were 220,000 and 244,000 respectively.

The unemployment rate ticked up to 9.1% from 9.0% (Briefing.com consensus 9.0%); the average workweek held steady at 34.4 hours (Briefing.com consensus 34.3); and average hourly earnings increased 0.3% (Briefing.com consensus +0.2%).  The latter was the most welcome surprise, yet the enthusiasm for the result is mitigated by the understanding that average hourly earnings over the last 12 months are up 1.8%, meaning they are negative on an inflation-adjusted basis.

The long-term unemployed (i.e., those workers unemployed 27 weeks or more) now account for 45.1% of the unemployed versus 43.1% in April.

Payroll gains in May were confined mostly to professional and business services and health care.  Government shed 29,000 workers, most at the local level and concentrated in the education sector.

The futures market responded to the employment report in negative fashion.  The S&P futures, which were down about three points, just ahead of the release, are now down 15 points and are trading 1.3% below fair value.

This report isn't going to do anything to eradicate concerns about an economic slowdown and it is certainly a politically-charged report on a number of fronts, ranging from election considerations to the debate on raising the debt ceiling.

The positive is that there is still job growth, yet the prevailing negative today is that the job growth isn't strong enough to bring down the unemployment rate and it isn't strong enough to lift consumer confidence and consumer spending by a meaningful degree.  Ironically, the latter understanding is a key reason why businesses are reluctant to hire in aggressive fashion.

--Patrick J. O'Hare, Briefing.com

Patrick J. O'Hare is the Chief Market Analyst for Briefing Research, Briefing.com's institutional research service. To request a free trial please email researchsales@briefing.com.