Sam Ro

Today's jobs report was solid, and the markets responded positively.

First, the scoreboard:

  • Dow: 16,020.2 (+198.6, +1.2%)
  • S&P 500: 1,805.0  (+20.0, +1.1%)
  • Nasdaq: 4,062.5  (+29.3, +0.7%)

And now the top stories:

  • U.S. companies added 203,000 nonfarm payrolls in November, which was much more than the 185,000 expected by economists. Meanwhile, the unemployment rate plunged to 7.0% from 7.3% in October. This happened even as the labor force participation rate climbed to 63.0% from 62.8%.
  • The strong report had Wall Street economists immediately pulling forward their expectations for when the Federal Reserve would begin tapering its quantitative easing program. "What else is the Fed waiting for?" asked Chris Rupkey of Bank of Toakyo-Mitsubishi." The economy has reached escape velocity and could well blast off in 2014.  Don’t ask when is the time to taper, the time to taper is NOW!"
  • However, not everyone was quite as aggressive as Rupkey. "We maintain our view that the Fed will taper its purchases beginning next March," said Michael Gapen of Barclays. "The recent employment data do increase the likelihood that the Fed could taper its asset purchases in December, but we believe the committee will continue to view declines in the unemployment rate as overstating the amount of improvement in labor markets."
  • Wage data was also encouraging in the jobs report. "Average hourly wages rose 0.4% in November after a like-sized pop in October, pushing up the year-over-year trend to 2.4%, the fastest pop since April," said Gluskin Sheff's David Rosenberg. "This is good news for the retailing community heading into the holiday shopping season."
  • The University of Michigan's preliminary measure of consumer confidence spiked to 82.5 in December from 75.1 in November. This was much higher than the 76.0 level expected. "The rebound in spending intentions is also particularly worth noting, with home purchase expectations jumping to 164 from 150, edging closer to recent highs and suggesting that consumer confidence in the housing recovery remains high despite the recent increase in mortgage rates," said Gennadiy Goldberg, a strategist at TD Securities.
  • In another sign of consumer strength, total credit balances expanded by $18.18 billion in October to $3.08 trillion. This was more than the $14.5 billion growth expected by economists.
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