The S&P faded in the final hour to post the smallest possible gain of 0.01%. The Dow could not quite hold onto its earlier gains and closed down 0.10%. The S&P 500 gained 1.4% for the first week of September.
Before the open, August nonfarm payroll data was released. The actual number of 169,000 was below the consensus estimate of 177,000. Private payrolls came in at 152,000 while the consensus estimate was for 180,000. Also, July nonfarm payrolls were revised lower to 104,000 from the prior reading of 162,000, a decrease of 21%.
A recent series of better than expected data increased the probability that the Fed would slow the pace of its asset purchase program, starting with the September FOMC meeting. But, today’s weak jobs data bring a little more uncertainty. Will tapering begin this month? What will the breakdown of purchases be between Treasury bonds and mortgaged backed securities?
The market acted favorably to the data with a reduced chance of tapering being viewed as a positive. There were slight gains at the open. The market quickly reversed course when comments from Russian President Putin hit the tape. Headlines read that Putin would support Syria should the U.S. take any action. Those comments were quickly digested by the market and a large move to the downside was erased and the market moved higher. The market was extremely sensitive to headlines today. The high for the Dow was 15,009 with the low at 14922, a 220 point range.
As soon as the jobs data was released, Treasuries and gold futures spiked to their highs for the session and the dollar slumped. The yield on the 10-year Treasury slumped as buyers came in early to buy. Treasuries gave back a large portion of those initial gains throughout the day.
After investors realized the news from Putin was not new news, the S&P 500 bounced off of its 100-day moving and roared ahead to challenge its 50-day moving average. Stocks fell from these levels after reports from Middle Eastern media outlets reported that another chemical attack had taken place in Damascus. These reports were not verified.
Oil and gold were beneficiaries of the uncertainty today. Gold rose by 1% and oil ended higher by 2%. Interest rate sensitive areas of the market were strong performers as bond yields retreated. Gold mining stocks had a strong day posting a 1.7% gain.
Source: PFS Group
