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Afternoon Note

Jobs Lift Markets

By Charles Payne, CEO & Principal Analyst
7/7/2017 1:31 PM
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What a change from yesterday.  The major indices are all up, thanks in large to the June jobs report.  The numbers beat the street, but wage growth is still rather weak.  Hourly wages have increased only 2.5% year over year.  Not great for a tightening labor market.  Thus, there doesn’t seem like there is any urgency for the Fed to raise rates again anytime soon.  U.S. Treasuries are lower today with the 10-yr bill at 2.39%. The greenback is up while Gold is at its lowest level since March.

Nine of the eleven S&P sectors are higher at midday.  Advancers are leading declines 1944/929 on the NYSE and 1939/840 on the Nasdaq. The technology sector, up 1.3%, is leading the S&P higher, along with strength from Consumer Discretionary and Real Estate.  One sector that is lagging today is Energy as oil prices decline 3% on oversupply concerns, with WTI trading at $44.17. 

The market is not paying much attention to the latest numbers from the Energy Information Administration (EIA), showing U.S. crude inventories fell by 6.3 million barrels to 502.9 barrels in the week ending June 30. Weekly government data shows that U.S. production increased 1% to 9.34 million barrels per day.  And the latest from Baker Hughes show 7 rigs were added, taking the number to 763, up from 412 this time last year.  This marks 24 out of 25 weeks of increases.

These increases coupled with OPEC exports, which are reaching the high for the year, is pressuring crude.  OPEC is scheduled to meet again on July 24 in Russia. So between now and then, oil will likely remain range bound and volatile.

Speaking of Russia, President Trump and Putin meet today for the first time for over two hours in Germany where the G20 is taking place. 

Next week is a big earnings week, especially for the financials. 

Have a great weekend.


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