The market popped this morning mostly on earnings results from big blue-chip names and big money center banks.  But, like every session over the past two weeks, the rally began to fade by 10:00.  Then, the Bureau of Labor Statistics posted the so-called August JOLTS report.

7,136,000 job openings

We are now approaching one million more job openings than prospective workers.  Moreover, the rate of job openings is at a blistering mind-boggling pace.

Milestones (number of months to clear)

• Four Million Job Openings: 36-months
• Five Million Job Openings: 11-months
• Six Million Job Openings: 12-months
• Seven Million Job Openings: 7-months

Interestingly, the rate of quits declined to 3.57 million from 3.61 million in July.  I’m not sure how important the number is with respect to Jay Powell, but Janet Yellen used to focus on this report, or more specifically, the “quits” component. The fact people are still not quitting in droves might speak to the lingering impact of the Great Recession, or maybe, wage offers are still not high enough for people to be lured away.

This kind of job growth doesn’t stop overnight – looks like the nation is on its way pass full-employment for real this time.  

This rebound should actually be higher, but its understandable investors are still guarded. 

Technology: Adobe (ADBE) is leading technology after management gave an update on growth going into 2019 and beyond.

Consumer Services: Omnicom crushed earnings estimates making it the unlikely leader in the big move in the sector.

• +0.6% US
• +6.9% Europe
• +13.6% Asia-Pacific
• +1.7% Latin America

S&P 500 Index	+1.44%
Communication Services (XLC)	+1.95%
Consumer Discretionary (XLY)	+1.03%
Consumer Staples (XLP)	+0.81%
Energy (XLE)	+0.59%
Financials (XLF)	+0.97%
Health Care (XLV)	+1.94%
Industrials (XLI)	+1.11%
Materials (XLB)	+1.29%
Real Estate (XLRE)	+1.31%
Technology (XLK)	+2.24%
Utilities (XLU)	+1.22%

Industrial Production and Capacity Utilization

Industrial production, output at factories, mines and utilities, gained 0.3% in September. This was the fourth straight monthly increase.  According to the Federal Reserve, Hurricane Florence reduced September output growth by less than 0.1%.  Year-over-year, industrial production increased by 5.1%. 

• Factory production increased 0.2%
• Mining production rose 0.5%
• Utility output was unchanged

Production rose for most major groups.

• Consumer good increased 0.2%
• Business equipment rose 0.8%
• Defense and space equipment rose 0.8%
• Construction supplies decreased 0.6%

Capacity utilization for manufacturing inched higher to 75.9%, which is 2.4% below its long-run average of 2.4%.

Source: Federal Reserve    Note: The shaded areas are periods of business recession as defined by the National Bureau of Economic Research (NBER).

Earnings

Earnings from Dow Jones Industrial Average components UnitedHealth (UNH), Johnson and Johnson (JNJ) and Goldman Sachs (GS) are helping the Dow power higher by over 400 points, 1.60%.   

Goldman Sachs beat consensus estimates on both its top and bottom lines.  Revenues rose 3.80% to $8.65 billon, beating consensus by $220.00 million.  Earnings of $6.28 per share were 25% higher than a year ago and $0.94 better than consensus.  This was the fifth time in a row GS beat on both the top and bottom lines.  GS is trading higher by $4.83, 2.24%, at $220.      

United Health reported earnings that beat on the bottom line.  Earnings of $3.41 per share beat consensus by $0.11.  Revenues rose 12.4% and were in-line with consensus.  UNH guided 2018 EPS higher to $12.80 from $12.50-12.75.  UNH is higher by $10, 3.75%, at $270.25.       

Johnson and Johnson beat on both its top and bottom lines and raised its 2018 outlook.   The company reported strong results in all three segments; consumer, medical devices and pharmaceutical.  JNJ is higher by $2.50, 1.90%, at $136.50.   

• The Dow is higher by 1.62%
• The S&P 500 is higher by 1.63%
• The Nasdaq is higher by 2.26%
• The Russell 2000 is higher by 1.97%

Breadth: Bullish

• NYSE advancers 2,508 to decliners of 481; new 52-week highs 12 to new lows 81
• Nasdaq advancers 2,314 to decliners 660; new 52-week highs 18 to new lows 74

Comments

The reasons cited for the rise seem to partially correct but do not explain the similar rise in percentage terms of most of the major European stock averages, except the U.K. which rose but by less than the rest. David Harvison on 10/16/2018 2:04:12 PM

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