An extremely busy and newsworthy week is nearing its end. This week is going out with a bang, too.
Market participants have now heard the House GOP's tax plan, the president nominate Jerome Powell to be Chairman of the Federal Reserve Board of Governors, and Apple (AAPL) follow form with its mega-cap brethren and post much better-than-expected earnings results for the September quarter.
Apple's good news, which also included a reassuring outlook for its fiscal first quarter, has boosted its stock 4% in pre-market action.
That's not all, though. This morning produced the Employment Situation Report for October, which marked a return to pre-hurricane form: nonfarm payroll gains were solid, average hourly earnings growth was weak, and there was a drop in the participation rate.
By and large, it is the type of report that the stock market should appreciate because it holds true to that Goldilocks theme of being neither too hot nor too cold. It was just right to ensure that the Fed will stick to its own theme of raising interest rates gradually. That is the key takeaway from the report.
The notable headlines from the Employment Situation Report are as follows:
- October nonfarm payrolls increased by 261,000 (Briefing.com consensus 300,000), aided by a sharp rebound in food services and drinking places jobs (+89,000). Over the past three months, job gains have averaged 162,000 per month.
- September nonfarm payrolls revised to 18,000 from -33,000
- August nonfarm payrolls revised to 208,000 from 169,000
- October private sector payrolls increased by 252,000 (Briefing.com consensus 307,000)
- September private sector payrolls revised to 15,000 from -40,000
- August private sector payrolls revised to 184,000 from 164,000
- October unemployment rate was 4.1% (Briefing.com consensus 4.3%) versus 4.2% in September
- Persons unemployed for 27 weeks or more accounted for 24.8% of the unemployed versus 25.5% in September
- The U6 unemployment rate, which accounts for both unemployed and underemployed workers, 7.9% versus 8.3% in September
- October average hourly earnings were flat (Briefing.com consensus 0.1%) after increasing 0.5% in September
- Over the last 12 months, average hourly earnings have risen 2.4%, versus 2.9% for the 12 months ending in September
- The average workweek in October was 34.4 hours (Briefing.com consensus 34.4), versus 34.4 hours in September
- October manufacturing workweek increased by 0.2 hours to 41.0 hours
- Factory overtime increased 0.1 hours to 3.5 hours
- The labor force participation rate was 62.7% in October versus 63.1% in September
In other developments, the trade deficit for September increased by $0.7 billion to $43.5 billion, which was in-line with the Briefing.com consensus estimate.
September exports were $196.8 billion, $2.1 billion more than August exports. September imports were $240.3 billion, $2.8 billion more than August imports.
Exports of crude oil (+$1.1 billion) played a large role in the export increase while imports of capital goods, except automotive (+1.5 billion) drove the import increase.
Notwithstanding the slight widening in the trade deficit in September, net exports should still remain a positive contributor to Q3 GDP growth with the second estimate as the third quarter average for the real trade deficit is still 0.5% less than the second quarter average.
The major indices are on course for an average start, which is to say they aren't going to lose any meaningful ground at the open. The S&P futures are up one point, the Nasdaq 100 futures are up 29 points, and the Dow Jones Industrial Average futures are up 30 points.