At 8:30 a.m. EST, the October non-farm payrolls report came in
stronger than expected, with 204,000 jobs created vs.
expectations of 120,000K. Additionally, September's number was
revised up to 163,000 from 148,000. Household survey employment
showed a decline of 735,000 jobs as the government removed
furloughed workers during the shutdown, though they may be added
back to the labor force count next month.
Interestingly enough, ahead of the news, there were rumors
circulating that the non-farm payroll number would be announced
at 180,000, driving significant volatility in currencies,
commodities, stocks, and bonds.
In reaction to the report, we saw drops in US stock futures and
commodities, while the dollar and US Treasury yields popped.
Strong economic numbers, particularly when it comes to
employment, often drive fears that the Fed will move closer to
tapering its quantitative easing activities.
However, stocks quickly reversed themselves and powered higher,
(INDEXSP:.INX) finishing 23 points higher at 1770.61.
It was very much a "risk-on" day, with significant outperformance
(INDEXNASDAQ:.IXIC) as high-beta tech names like
) rebounded from Thursday's heavy downside pressure.
Plus, financial stocks and small-cap stocks showed real strength,
while the interest rate-sensitive utility sector took a hit on
the aforementioned spike in US Treasury yields.
Keep in mind, however, that Thursday was a very big down day, an
ideal setup for a rally off strong economic data that few folks
were expecting. In fact, the high estimate on the NFP number was
175,000, so 200,000 was an unqualified upside surprise.
Elsewhere, in its second day of trading, social media giant
) fell 7.2% to $41.65.
Hudson Square Research analyst Daniel Ernst initiated coverage
with a sell rating, saying, "There seems to us no upside scenario
not already more than included in Twitter's implied growth
outlook." However, after Thursday's 72% pop off its $26 IPO
price, profit-taking was already likely for today.
) came under serious pressure in early trading today after the
National Highway Traffic Safety Administration announced it was
looking into a fire in a Tesla Model S sedan, the third in six
weeks. However, it staged a comeback in the afternoon and
finished almost $6 above its low. Still, the stock is nearly 30%
off its late-September all-time high of $194.50.
There were also a number of earnings reports today. Notable names
beating expectations include
Brookfield Asset Management
(SSP) missed consensus estimates.
Monday's Financial Outlook
There are no economic reports scheduled for Monday, which is
Veterans Day. Note that the US Treasury Market will be closed.
Earnings season is winding down, though we will see numbers from
(ABFS) before the open, and
(RAX) after the close.