Reply #85: closing blather

[UpInArms]

The major averages closed sharply lower Friday as a mixed jobs report, downside guidance from two bellwethers and the absence of notable sector leadership kept buyers on the sidelines going into the weekend.

As if ADP Employer Services saying Wednesday that June nonfarm payrolls (according to their estimates) were very strong didn't create enough confusion about job growth, a mixed employment report from the Labor Dept. merely exacerbated uncertainty with regard to Fed policy. On the one hand, June nonfarm payrolls rising only 121,000 -- a level of growth consistent with the "soft landing" the Fed is trying to achieve, eased concerns of policy makers going too far with their tightening efforts. To wit, Treasuries took notice sending yields to session lows; the 10-yr yield closed at 5.12%. However, even though the market was initially relieved that the rumors of a June payroll surge did not materialize, a larger than expected 0.5% jump in hourly earnings -- an inflationary factor that could influence the Fed since it equates to year-over-year growth of 3.9%, the biggest gain in five years -- lent some rationale for another rate hike in August.

With earnings season officially beginning Monday and investors beginning to switch their focus to corporate profits, warnings from two industry bellwethers also weighed on sentiment, questioning the likelihood of a 12th straight quarter of a double-digit operating earnings growth for the SnP 500. The Industrials sector was hit the hardest after 3M Co. (MMM 74.10 -7.29) issued downside second-quarter earnings guidance due to lower than expected sales volumes for optical systems used in flat panel displays. Aside from Technology also falling victim to a warning after Advanced Micro Devices (AMD 23.56 -0.27) said second-quarter sales will be below expectations, 3M's warning also weighed on Corning (GLW 22.15 -1.09), the largest maker of glass for LCDs, preventing tech from surrendering its status as this year's worst performing sector.

Not even crude oil prices falling 1.4% from record highs was enough to get investors excited, even amid expectations that gas prices could surpass $3.00 a gallon nationally next week. While lower oil prices may bode well for consumers, especially with the summer driving season in full swing, a 1.3% decline in Energy questioned the sector's continued ability to support double-digit earnings growth for the broader market. BTK -0.58% DJ30 -134.63 DJTA -0.86% DJUA +0.68% DOT -0.88% NASDAQ -25.03 NQ100 -1.15% R2K -1.57% SOX -1.52% SP400 -0.93% SP500 -8.60 XOI -0.48% NASDAQ Dec/Adv/Vol 2181/852/1.79 bln NYSE Dec/Adv/Vol 2005/1246/1.43 bln

Have a great weekend all :hi: