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The US Markets were up last week as the Dow hit new highs on Friday not seen since December 2007. The September jobs report came in better than expected on Friday to cap off a strong week in the US markets.
US manufacturing grew for the first time in 4 months. The ISM (Institute for Supply Management) report showed an increase from 49.6 in August to 51.5 in September. This came as a surprise since most analysts were expecting the number to remain below 50. Many economists are hopeful that this surprise uptick in manufacturing data could help bolster the economy for a strong 3rd quarter after a weak summer.
The ECB (European Central Bank) and Bank of England both voted to keep their historically low interest rate environments intact last week, thereby bolstering markets. As a reminder, the purpose for keeping interest rates low from a Monetary Policy standpoint, is to provide liquidity to banks (at extremely low interest rates), thereby incentivizing them to lend more money at low interest rates to businesses/corporations, thereby incentivizing businesses to invest/hire/spend. Nevertheless, an extended low interest rate environment coupled with quantitative easing (bond purchase program/money printing) increases the risk for hyper-inflation. This is the reason why gold and silver have once again been on the rise with gold sitting near $1,800/ounce and silver around $35/ounce.
On Friday of last week the September jobs report hit the wire and surprised most analysts with a better than expected outcome. About 114,000 net new jobs were created in September and caused the unemployment rate to decline from 8.1% to 7.8%. This marks the first time the unemployment rate has shown a reading below 8% in 44 months. While the headline of the report was exciting news for the US economy, the details of the report were less thrilling. The good news is that the unemployment rate declined while the labor force participation rate remained steady. Additionally, the July and August jobs reports were adjusted higher by about 80,000 jobs. However, the 114,000 new jobs in September were below the monthly average of 139,000 and also below analysts’ estimates. All-in-all the report was less exciting then most investors initially hoped which is why the markets came off their early Friday highs to close the day with mixed results.
This is for illustrative purposes only and is not indicative of any investments. Investment value will fluctuate with market conditions. Past performance is no guarantee of future results.
(Sources: finance.yahoo.com, www.bloomberg.com, Investors Business Daily, www.economy.com, www.newyorkfed.com, www.mworld.com, www.htrnews.com, www.wsj.com)
