Sun, Oct 05, 2014 - Page 15 News List

Strong jobs report pares US stock losses

‘CONSOLIDATING GAINS’:US markets received a lift from the 248,000-job addition last month, but also digested reports such as a big decline in consumer confidence


Last month’s jobs report lifted US stocks on Friday, but it was not enough to counteract the hit earlier in the week from worries on everything from Ebola to tanking oil prices.

All three indices lost ground for a second week in a row, with the Dow Jones Industrial Average ending at 17,009.69, down 103.46 points (0.6 percent).

The broad-based S&P 500 shed 14.95 (0.75 percent) to 1,967.90, while the tech-rich NASDAQ Composite Index fell 36.57 (0.81 percent) to 4,475.62.

Ventura Wealth Management portfolio strategist Tom Cahill said that Friday’s jobs report was “obviously very good news” for a market that spent much of the week deep in the red.

The US Department of Labor report said the economy added 248,000 jobs last month, rebounding from a disappointing August report. Most analysts said the figures bolstered confidence that the US economic recovery remained on track, but is not so robust to prompt the US Federal Reserve to speed up its timetable for lifting benchmark interest rates.

Several other economic reports were surprisingly weak. The S&P/Case-Shiller home-price index showed slower price growth in July than June, while the Conference Board reported a big drop in consumer confidence in August. Reports on manufacturing sector activity and construction spending also disappointed.

Market watchers also brooded over a veritable laundry list of worries. These include: a weaker economic outlook in China; uncertainty over Europe’s prospects after the European Central Bank offered little detail on its stimulus plan; a sharp decline in oil prices that hit energy equities; the strengthening US dollar and the resulting drag on US corporate earnings; and the first diagnosis of Ebola in the US.

“With the lack of a driver to push the market higher, the market has used the negative data that’s been out there to create a mini-pullback,” Kenjol Capital Management portfolio manager David Levy said.

Cahill of Ventura Wealth Management said a “consolidation phase” has also been a factor of late. The S&P 500 gained about 30 percent last year.

“It makes a lot of sense to spend some time consolidating the gains,” he said. “Last year was a phenomenal year.”

Both Levy and Cahill said the upcoming earnings period would be important in determining what the last stretch of the year brings.

Companies in the S&P 500 are projected to report earnings 6.8 percent higher than a year ago, according to S&P Capital IQ.

Major corporate stories this week included General Motors’ (GM) release of an ambitious plan to achieve overall pre-tax profit margins of between 9 and 10 percent by the early 2020s.

GM forecasts huge sales increases in China, the return of Europe to profitability in 2016 and higher profit margins in the US following new vehicle launches and cost-cutting. GM finished the week 1.8 percent higher.

JPMorgan Chase (down 0.4 percent) disclosed that information such as names and addresses for 76 million household customers and 7 million businesses were compromised in a data breach this summer, making it one of the biggest hacking episodes ever.

However, the US’ largest bank said there was no evidence that critical account information, such as account numbers, user identities or social security numbers, were stolen by the hackers.

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