Markets

Market Wrap-Up for Sept.2 (BAC, JPM, HRB, FDX, GLD, more)

Wall Street reactived negatively to yet another jobs number shortfall, as the call for QE3 begins to resonate once again. With Federal Reserve Chairman Ben Bernanke as "head nurse" it is likely we will see further accommodation for the struggling economy.

The financial sector was hit hard on news Bank of America ( BAC ), JP Morgan ( JPM ) and other lenders could face a lawsuit from the U.S. Federal Housing Finance Agency over faulty mortgage loans. This may not be good news for investors that have followed Warren Buffett's investment foray into Bank of America (remember, his move was customized to his specifications and not in common stock). On the earnings front, H&R Block ( HRB ) left much to be desired with its results, as shares sold off today. Wall Street analyst downgrades took a toll on shares of FedEx ( FDX ) and Eaton Vance ( EV ) as well. Gold ( GLD ) prices jumped on the bad economic data. With the long 3-day weekend approaching, trading volume could begin to dissipate as the afternoon rolls on.

According to a CNN Poll taken last week, more than eight in 10 Americans think the economy is in another recession. This morning's abysmal monthly jobs report seems to corroborate those survey results. As much as we are hearing about jobs being a big issue for the economy to get going, where were the concerns before all the election rhetoric recently arrived? Elected officials continue to exhibit a knack for shutting the barn doors long after the horses have run.

The job market should be front and center, and how quickly we see new jobs being created will have an impact on what companies can thrive and others can begin to rebound. There is talk of infrastructure being the area Washington will be looking at for new job creation. This type of move could be a catalyst for cyclical companies that would be in the midst of that initiative. One of our recent concerns is the pickup in earnings misses and managements worrying about their profit outlooks. Will there be a decision for some companies to trim their workforce to sustain current margins? You see what happened with Hewlett-Packard( HPQ ) as the company focused on preserving margins rather than putting much capital back into R&D and new relevant product development. There are many companies that appear to be following the same track, so we will continue to monitor the earnings-related news closely.

What area of the jobs market is seeing any sort of demand? Jobs website CareerBuilder recently put out a report highlighting the biggest area of need for employers that participated in their study.

1. Customer Service - 23 percent

2. Information Technology - 21 percent

3. Sales - 20 percent

4. Administrative - 15 percent

5. Business Development - 11 percent

6. Accounting/Finance - 10 percent

7. Marketing - 9 percent

Some of these needs will not translate into higher-paying jobs and despite having a 4-year college degree (and sometimes more), employee prospects will have to adjust their salary expectations in many cases. This trend will only add fuel to the ongoing debate as to the ROI (Return on Investment) a college degree can actually bring. A growing number of parents are rethinking how much they're willing to spend on a child's college tuition. Student lender Sallie Mae just issued a report where it found about 51% of parents "strongly agreed" that they would stretch financially to to send their children to college, down from 64% of parents last year. This is the first time the number has dropped since the firm began the survey in 2007.

It used to be a no-brainer that if you could afford to send your child to college, you'd do it. With the added worry about employment and saving for retirement, there is much more debate going on these days behind closed doors. Recently, a friend of mine helped his two college graduate children acquire two retail confectionery businesses (owned by the same family - one on the Jersey shore boardwalk and the other located off the boardwalk, but in the same town). It comes down to making the best of a situation, and that's how my friend looked at it. Is there regret he spent the money on two college educations? It's actually not an easy answer when I asked him that. You can make arguments for both sides of that question, as his kids came out of school much more mature, well-rounded individuals than beforehand, despite not really picking up any technical skills they could put to work in the workplace.

Nonetheless, we all have to answer tough finance questions that come our way over the course of our lives. Investors need to decide what their best bet is when it comes to putting capital to work. Do they want to follow the wealth-building strategy of buying assets that produce steady income (dividend-paying stocks, positive cash flow real estate)? Do they want to bet on themselves by owning a business? Can they afford to do both? Are they equipped to handle the day-to-day of running a business (the ups and downs can certainly be tough).

We have plenty to think about these days, but I will not shy away from from bringing these issues to light.

At Dividend.com, we are maintaining our focus on the best income-producing investments the markets have to offer during time of heightened volatility. We want to make sure we have only the most pullback-resistant names on our "Best Dividend Stocks" list . Also, if we see the market putting in what looks like a decent bottom, we will be prepared to scale up the list of stocks we like. Stat tuned and be sure to look for Dividend.com Premium member alerts along the way.

Looking ahead to next week, quarterly earnings will be fairly light as the shortened market week (closed Monday for Labor Day Holiday) will feature results from Men's Wearhouse ( MW ), Kroger ( KR ), and several others.

Be sure to catch up with our latest watchlist updates this weekend on Dividend.com Premium , including reports on earnings/story stocks, analyst upgrades/downgrades, dividend ETFs, and much more. And as always, you can view our current recommendations on our industry-leading "Best Dividend Stocks" list .

Thanks for reading my newsletter, everybody! Please pass this on to anyone you think we can get inspired and educated about building wealth and using common sense to do so.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

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

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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.

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