Stocks Shrug Off Strong Jobs Numbers

By Matthew Klein |  Friday, November 6

Jobs Day. The networks and newswires haven’t yet called the presidential election though Joe Biden is leading in the key vote counts in Arizona, Georgia, Nevada, and Pennsylvania. The main news event of the day, therefore, came from the latest jobs data for October.

The good news is that employment growth was robust. The bad news is that many of the Americans who lost their jobs when the pandemic began are still out of work. The number of Americans who have been unemployed at least 27 weeks is now 3.6 million, up from less than 1 million before the pandemic. On top of that are roughly four million Americans who have dropped out of the labor force since February.

Essentially all of the decline in joblessness since the peak in April can be explained by workers who were called back to their jobs after being on   temporary layoff. That’s great for them, but unfortunately it’s left behind a large contingent of permanent job losers who have been missing out on the recovery. It helps explain why the broad jobless rate is still over 9%. That’s better than at the worst point of the global financial crisis, but not by very much.

Markets weren’t too disappointed with the numbers, but the sharp boost in hiring wasn’t enough to push stocks up for the day. The S&P 500 index was effectively unchanged (down 0.03%), with 280 of the components down for the day. Most of the 11 sectors had only small moves, but energy and financial stocks were down sharply. The tech-heavy Nasdaq Composite was also flat, but the Russell 2000 small-cap index lost about 1%.

The biggest winner for the day was News Corp, the owner of Barron’s, up 9%. Other big gainers include Swiss scale manufacturer Mettler-Toledo (up 7%) and Albemarle Corporation, which makes lithium for electric vehicle batteries (up 6.4%). On the other side were industrial pump manufacturer Flowserve Corporation (down 9.4%), DXC Technology (down 7.5%), and Norton LifeLock (down 7.4%).

Despite the day’s lackluster performance, it was still one of the best weeks for American stock markets since the April. It was also a banner week for international stocks, with European, Canadian, Japanese, Hong Kong, and Korean markets all having their best performance in months. Other risk assets also did well, with oil and metals rising as the dollar fell against most currencies.

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