Stocks went nowhere today as investors wait for a delayed September jobs report to be released tomorrow.
Getty Images The S&P 500 rose 0.01% to 1,744.66, while the Dow Jones Industrial Average fell 0.05% to 15,392.20.
Nomura’s Lewis Alexander and team explain what to expect–and why it probably won’t matter:
On Tuesday, 22 October, we expect the Bureau of Labor Statistics (BLS) to report the addition of a net new 180k jobs to nonfarm payrolls in September, in line with the consensus expectation. Our forecast is based on our judgment that there was a modest pickup in labor market momentum in September.
That said, it is important to remember that these data will reflect the state of the labor market in the middle of September, i.e., over a month ago and well before the government shutdown. The data in this report will affect our understanding of how the labor market is evolving and the state of the economy. But given the delay, and what has happened since the source data were collected, this report should not affect our views on the current state of the economy as much as normal. We won't see the impact of the government shutdown on payrolls until the October report, scheduled for release on Friday, 8 November 2013.
Because of such uncertainty regarding the data, many investors are concluding that the Fed will wait to begin cutting back on its bond buying. Capital Economics Paul Ashworth and Paul Dales are not so sure:
The S&P 500 Index remained near a record high on Monday, supported by the growing view among investors that the Fed will maintain the pace of its monthly asset purchases for quite some time. However, on balance we still expect that the Fed will start to taper its purchases before the end of this year.
It certainly seems very unlikely that the Fed will announce a reduction in its purchases at next week's FOMC meeting. There will be a backlog of government data releases that the committee will not have had the opportunity to digest. And Fed officials will also want to see some evidence on how the economy was performing in October, to confirm that the government shutdown only had a minor impact.
Many forecasters have also concluded that there is little chance of tapering being announced at the mid-December meeting, but we are less sure. By that time, Fed officials will have plenty of data showing not only what impact the shutdown had but also how well the economy bounced back in November.
The market in aggregate might have gone nowhere, but that wasn’t for lack of big moves from individual stocks. Parker-Hannifin (PH) gained 2.4% to $115.06 after it was upgraded to Outperform from Neutral at Baird, while Newmont Mining (NEM) gained 2.2% as gold miners headed higher today.
On the downside, Halliburton (HAL) fell 3.5% to $50.66 after beating earnings but underperforming competitors, while Regeneron Pharmaceuticals (REGN) fell 2.4% to $294.89 after it reported positive trial data on Eylea and that it will file an application with the FDA in a few months. And our big loser of the day: PetMed Express (PETS), which plunged 9.8% to $15.21, the biggest drop in the S&P 1500. It reported a profit of 21 cents a share, missing forecasts for a profit of 22 cents.
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