Stocks end week lower on Jobs Report

The stock market ended lower Friday, but well off its lows ahead of the long 4th of July weekend. The news of the day was the June jobs report, which saw a net loss of 125,000 jobs for the month as part-time census workers were laid off. The unemployment rate actually dropped to 9.5%, but that is due to over 650,000 workers leaving the workforce, as they stopped looking for a job. The market sold off to as much as a 120 point drop in the Dow Industrials, but short sellers covered their positions ahead of the weekend. Volume was light.

Earnings season is now ahead and what should start to drive stocks a bit. Rather than focus on actual 2nd quarter earnings, traders will likely focus on company outlooks. The comparisons to last year will be very favorable, as the economy has improved somewhat since then. The fear now though is whether the economy is beginning to weaken again, as the more recent data suggest.

One interesting new trend that developed this week is that the U.S. Stock market has decoupled from the Euro. In recent weeks, due to the Greek debt crises, stocks have fallen in response to a weakening Euro. This week, however, the Euro has rallied sharply, and yet stocks continued to fall. Traders now have an eye toward the U.S. as a new debt problem. Currency traders are looking at Europe a little more favorably since Europe's attitude about debt has changed toward austerity. Here in the U.S., the Obama administration insists on more stimulus.

Keep an eye on the trends!

Scott Cole