Stocks Rangebound Ahead Of Earnings And Jobs Report September 2012:
Stocks have barely moved in the last two days as investors await earnings news and the September 2012 jobs report. The stock market has been in a tight range to begin the fourth quarter with the first 2 days of October characterized by rangebound trading and a slight increase in volatility that dropped sharply at the close of trading today.
Estimates for non-farm payrolls haven’t changed much and we are expecting similar growth to last month. Only 96,000 jobs were created in August 2012 and employment growth may revert back to the mean which is around 85,000 for the last few months. The jobs number will come after the first presidential debate scheduled for tomorrow and it may show another consecutive month of unemployment above 8 percent. That would make 44 straight months of unemployment above 8 percent which is by far the longest in U.S. history. We are expecting 100,000+- 25,000 new jobs for the month of September 2012 which is still below the number needed to keep up with working population growth.
Labor participation rates will be key to the new unemployment report. After hitting the lowest level in 30 months in August, the calculations could turn the jobs number into a positive spinning tool for the Democrats if the nominal rate hits below 8 percent and is close to the 7.8 that President Obama inherited.
We continue to be bullish neutral in the short run and purchasing equities at the beginning of the week would have yielded little gains but there was a buying opportunity at the end of last week which is still holding as a temporary support level.