Economic Fireworks Continue - Ahead of Wall Street


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Thursday, July 3, 2014

This is Mark Vickery, covering for Sheraz Mian while he is away this week.

Following Wednesday's better-than-expected private-sector jobs report from ADP (ADP), the Bureau of Labor Statistics (BLS) countered with another solid jobs read for June: new job creation for the month went up 288K, with an unemployment rate that has fallen to 6.1% - that's the lowest number since September 2008, or before the crash. In context, consider whether we wouldn't have killed - or severely injured somebody - for numbers like these a couple years ago.

Earlier months were upward revised as well: May jobs gains rose to 224K from 217K, and April's 304K revision marks the highest number in more than 2 years. Professional and Business Services went up 67K, Retail +40K, Bars & Restaurants 33K, Healthcare +21K and Local Government +22K. In other words, we're seeing across-the-board strength.

While the Participation Rate remains historically low at 62.8%, these are numbers that are hard to argue with. Of course, with the stock market being a forward indicator, what this really amounts to is a justification of record highs recently established. That said, economic strength is still way better than the opposite; we may not see a huge pop in stock trading with the low volumes this week, but there is little if any potential for stocks selling off at these levels with such good news about the general economy.

So while taking some time off to vacation somewhere far away from Wall Street in a week like this is almost always worthwhile, taking a nap on the macro-economic narrative that has transpired over the past few days is likely as mistake, especially if you are suspicious about stocks maintaining their relatively lofty valuations. The second half of 2014 is manifesting itself in-line with analysts' bullish consensus; it indeed looks like time to feel good about growth in America again.

So what's the next step? Business investment. With traction being established in jobs data - and proven in the past two days - we may see more involvement from corporations sitting on their huge mounds of cash. Put into the system, we might expect even better jobs and productivity numbers going forward. Which is exactly where we were supposed to be in 2014, Q1 notwithstanding.

Feels good to be an American. It would anyway on the eve of Independence Day, but it's even sweeter with a positive economic narrative going into Q2 earnings season, beginning next week. Happy Fourth of July!

Mark Vickery

Senior Editor

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Stocks , US Markets

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