JOBS UP, STOCKS DOWN… Sometimes the headlines don’t make sense. The Nonfarm Payrolls report saw a way-better-than-expected 295,000 new jobs added to the economy in February, while the Unemployment Rate dropped to 5.5%. The reaction on Wall Street? Stocks tanked, sending the three big market indexes to their second straight week of losses. You’d think investors would be happy that a strong jobs report means the economy is growing, consumers are better off, and corporate earnings will probably grow. Well, they also feel such a report will probably inspire the Fed to start raising rates sooner, perhaps as early as the June meeting.
Actually, when you look past the headlines, that jobs report wasn’t so swell. The dip in the Unemployment Rate was due to 354,000 people dropping out of the labor force in February, cutting the participation rate to 62.8%. We also have the nagging problem of stagnant wages, as average hourly earnings rose a miniscule 0.1% for the month (that’s 3¢ an hour). So the Fed may remain “patient” about raising rates. In other economic news, the usual mixed bag of data saw the ISM manufacturing down, ISM Services up, Q4 Productivity down, and the Trade Deficit smaller, though still more than $41 billion. This is also the worst yearly start for jobless claims since 2009.
The week ended with the Dow down 1.5%, to 17857; the S&P 500 down 1.6%, to 2071; and the Nasdaq down 0.7%, to 4927.
It was a tough week in the bond market, ending with that better-than-expected jobs report. The 30YR FNMA 4.0% bond we watch finished the week down .16, to $106.14.Yet for the first time in four weeks, national average fixed mortgage rates headed lower in Freddie Mac’s Primary Mortgage Market Survey for the week ending March 5. Rates now hover near 21-month lows. Remember, mortgage rates can be extremely volatile, so check with your mortgage professional for up to the minute information.
DID YOU KNOW?… U.S. oil production has grown dramatically. In 2005 we imported 11.1 times the amount of oil we exported. In the last year, imports have only been 2.3 times exports.
This report courtesy of Troy Lepisto, First Mortgage Company, phone 505-670-6399. For informational and educational purpose.