This little old week when so many people are said to be on vacation and disinterested in the stock market has turned into a big week so far for the stock market. Through some well-chronicled trials and tribulations on the geopolitical and natural disaster fronts, the stock market has plowed ahead with bullish resolve.
Entering today's session, the Nasdaq Composite is up 2.6%, the Russell 2000 is up 2.0%, the S&P Midcap 400 is up 1.3%, the S&P 500 is up 1.2%, and the Dow Jones Industrial Average is up 0.6%.
That's the picture of a broad-based move and it has been helped along by the persistence of low (and falling) interest rates, emergent optimism that Congress will avoid any budget and debt ceiling drama in September so that Texas can be assured of receiving the federal aid it desperately needs without undue delay, and encouraging economic data.
The string of encouraging economic data seen this week, though, got tied in a knot by this morning's Employment Situation report for August. That report fell short of expectations on a number of fronts, with average hourly earnings growth being the most prominent shortfall.
The key takeaway from the report is that wage inflation is still not picking up despite the low unemployment rate. That will keep the Goldilocks narrative in place, which has served as a perfectly-cooked bowl of porridge for a stock market that has feasted on a backdrop of modest growth and low inflation.
The S&P futures are up six points, the Nasdaq 100 futures are up 19 points, and the Dow Jones Industrial Average futures are up 59 points, trading at roughly the same levels they were in front of the employment report. Those indications have the major indices on track to open the day 0.2% to 0.3% higher.
Separately, the 10-yr yield is up one basis point to 2.13% while the 2-yr yield is down one basis point to 1.32%. The US Dollar Index is down 0.5% to 92.22.
The notable headlines from the Employment Situation Report are as follows:
- August nonfarm payrolls increased by 156,000 (Briefing.com consensus 183,000). Over the past three months, job gains have averaged 185,000 per month.
- July nonfarm payrolls revised to 189,000 from 209,000
- June nonfarm payrolls revised to 210,000 from 231,000
- August private sector payrolls increased by 165,000 (Briefing.com consensus 173,000)
- July private sector payrolls revised to 202,000 from 205,000
- June private sector payrolls revised to 207,000 from 194,000
- August unemployment rate was 4.4% (Briefing.com consensus 4.3%) versus 4.3% in July
- Persons unemployed for 27 weeks or more accounted for 24.7% of the unemployed versus 25.9% in July
- The U6 unemployment rate, which accounts for both unemployed and underemployed workers, held steady at 8.6%
- August average hourly earnings increased 0.1% (Briefing.com consensus 0.2%) after increasing an unrevised 0.3% in July
- Over the last 12 months, average hourly earnings have risen 2.5%, unchanged from the 12-month period ending in July
- The average workweek in August was 34.4 hours (Briefing.com consensus 34.5), versus 34.5 hours in July
- August manufacturing workweek declined 0.2 hours to 40.7 hours
- Factory overtime was unchanged at 3.3 hours
- The labor force participation rate held steady at 62.9% in August
The economic news isn't done yet, though.
Today's economic calendar is a busy one that will also feature the manufacturing ISM Index for August (Briefing.com consensus 56.8), the Construction Spending report for July (Briefing.com consensus +0.5%), and the University of Michigan Consumer Sentiment report for August (Briefing.com consensus 97.1) at 10:00 a.m. ET. Auto and truck sales for the month of August will be released throughout the session.
As a reminder, the market is closed Monday in observance of Labor Day. Enjoy the holiday weekend!