This week’s headline was the scant employment report number. Even taking into account the jobs lost during the Verizon strike, U.S. non-farm payrolls rose by only 38,000, far below the 155,00 anticipated and the fewest additions in nearly six years. Adding to the disappointment, April and March results were revised downward. This left traders – and economists – scratching their heads. Was the report merely a blip in a long-term jobs recovery or the signal of a recession? Wall Street, after an initial negative reaction on Friday, recovered somewhat, as Fed watchers now believe the employment malaise will take a June rate hike off the table. The dollar plummeted on the news while bonds and gold rebounded. For the week, stocks were mixed: The Dow Industrials lost 66 points or 0.4%; the S&P 500 was unchanged; and the NASDAQ managed a meager 0.2% gain.
With the possibility of an interest rate boost in June (and possibly July), less likely, the usual culprits were on the move. Financial stocks, which will benefit from higher interest, were the biggest drag on the market falling 1%, while income sensitive utilities moved higher by 2.5%. Crude prices headed south a bit as did energy and energy-related stocks. OPEC failed to reach a new deal on oil production and rejected any curtailment on output. For the month of May, however, West Texas Intermediate advanced about 7% on oil disruptions in the mid-east and Canada, capping the longest run of monthly gains for oil in five years. However, the price level around $49/bbl. remains tenuous as global growth is still in the doldrums and there remains a glut of oil in inventory waiting to be consumed.
On Monday, Federal Reserve Chair Janet Yellen addresses the World Affairs Council in Philadelphia, and may indicate her thoughts as to whether an interest rate bump of 0.25% is officially off the table for now. However, her comments have never been very decisive, hedging her views with “data dependency”. In all, equities appear to remain the best bet in town vis-à-vis other investments and, specifically, the U.S. stock market is in better shape than most foreign plays. For the long-term, holdings in high-quality issues such as 3M, Johnson & Johnson, Kimberly-Clark and United Parcel Service are decent bets on a slow-growth economy. And if the dollar continues to slide, some good news for the multi-nationals.
Here is the answer to last week’s trivia question: The first Chick-fil-A opened in 1967, in the food court of the Greenbriar Mall in suburban Atlanta. Chick-fil-A is? Owned by Cerberus Capital Management; Publicly traded on the NASDAQ under the ticker symbol CHIK; a unit of Dine Equity; or Privately held. Answer: Chic-fil-A is privately held
Today’s Trivia Question: Humana is one of the country’s largest private health insurers. The company, created in 1974, was originally formed as a: Human resources provider; owner/operator of hospitals; pharmaceutical research firm; or medical supply distributor.