Major averages fell yesterday on mixed, above average volume with higher volume on the NASDAQ which closed just below its 50-day moving average. After being up 15 days in a row, the Russell 2000 fell for the fourth day in a row. A notable divergence continues to take place as the Dow Industrials and financials were both up on the day.
November non-farm payrolls came in at 178,000, under consensus of 200,000. The prior month's reading was revised to 142,000 from 161,000. Nonfarm private payrolls added 156,000, below expectations of 170,000. The unemployment rate fell to a nine-year low of 4.6%, below the estimated 4.9%.
In another positive sign for economic growth, a broader measure of unemployment fell to 9.3% from 9.5%. This measure is the so-called U-6 rate that includes part-timers who can’t find a full-time position and those who have recently given up looking for work.
That said, skepticism abounds with regard to the accuracy of the data since such government statistics have been called into question. As a consequence, some analysts put the unemployment rate much higher than even what is reported by the U-6.
Nevertheless, the Federal Reserve is now all but certain to raise interest rates later this month and may have to move rates higher at a faster pace than markets now expect.
The market's reaction was initially mixed but is now rallying, placing futures almost at breakeven after being down. On the one hand, a strong jobs report is a sign the economy has turned the corner. On the other hand, it is a sign interest rate hikes may come faster after the Fed hikes in December.