Stocks Face New Rate Fears

[greenpagan]

By REUTERS
Filed at 10:54 a.m. ET

NEW YORK (Reuters) - U.S. stock investors head into this week with fresh concerns about inflation and interest rates after Friday's payrolls report showed robust job and wage growth, while a less-than-stellar earnings picture could add to weaker sentiment.

Oil prices above $65 a barrel also could dampen the mood for bulls on Wall Street, as worries over possible United Nations sanctions against No. 4 oil exporter Iran over its nuclear program continue.

Friday's report from the Labor Department tripped the market, helping push stocks down for a second straight day.

``We'll have a spillover effect from the jobs report ... with the debate heating up about the inverted yield curve and the Fed making a move past the March meeting,'' said Fred Dickson, strategist at Montana-based D.A. Davidson & Co.

Fed policy makers raised interest rates for a 14th time last week and hinted more rate increases might be needed to curb inflation. The data showing a tighter job market raised warning flags about the economy, analysts said.

The Labor Department report showed the U.S. unemployment rate fell to 4.7 percent, its lowest level since July 2001.

January payrolls added 193,000 jobs, below expectations, but payroll numbers for other months were revised higher, depicting strength in the labor market. Average hourly earnings went up 3.3 percent in the past 12 months, the largest for such a period in nearly three years.``If the economy continues to move along at a good pace, having some increase in labor costs, you'd expect,'' said Hans Olsen, chief investment officer at Bingham Legg Advisers in Boston. ``But to have it look like it's slowing and these increasing labor costs, that's not a good combination.

``It certainly places a headwind on stock prices.''

The yield curve, or the spread between the yields of the two-year and the 10-year U.S. Treasury notes, inverted further by the end of the week. Late Friday, the two-year note's yield was 4.58 percent -- or 5 basis points higher than the 10-year note's yield. This made stock investors nervous because an inverted yield curve has preceded recessions in the past.

http://www.nytimes.com/reuters/business/business-column-stocks-outlook.html?pagewanted=print

[ClintonTyree]

1. Nothing seems to "dampen the mood for bulls"..........

on Wall Street. The Market is going to rise forever. BUY! BUY! BUY! :eyes:

[ret5hd]

3. there was a guy posting on the Stock Market Watch thread last week...

who was bossting google stock. i asked him what would be a fair price for it. he said "anything under $1000, buy it!"

two days later it crashed and burned.

[AX10]

9. As a businessperson, I DO NOT bother with the Dow Jones 30.

The performance of 30 stocks has never swayed my views on the economy. There are many more factors that come into play regarding economic health.

[Lorien]

2. "Robust" job and wage growth??

WHERE????

[Turbineguy]

6. I think they

have a new metric.

For every person who has more than one minimum wage job, there's one less unemployed person. Since the average CEO makes 500 times his average employee that means that for every CEO there are 500 less unemployed people. Standing on a freeway offramp holding a cardboard sign is a new type of career choice.

Caveat:

This metric only works as long the economy does not improve otherwise it would be easy to go into negative unemployment rate.

[sarcasmo]

10. Michigan has no growth period. I hope these greedy bastards loose

their shirts. Don't come back flaming me about pensions. If your pension is investing in Halliburton you are just as greedy.

[gizmo1979]

4. The stock market is the biggest pyramid

scheme ever!The only ones who make any money are at the top of the pyrimid.

[seasat]

5. IMHO, Shrub Inc tax cuts are fueling a dangerous stock market

When the idiots cut the rates to 15% for capital gains and dividends, they helped create another bubble. The fair market prices should have readjusted to a lower level relative to earning post the 2000 irrational exhuberance bubble. However, the Shrub Inc tax cut has kept it afloat for the wealthy. You can bet when it bottoms out again, the big players will already be out with their money while the mom and pop pension plans will be left in the red.

[Turbineguy]

7. Tax cuts

plus deficits pump artificial money into the market.

[Kolesar]

8. Have to know what a normal yield curve looks like before knowing what a ..

... inverted yield curve looks like. I hate financial technical writing. They are loose with terminology and assume that you already know the background. And I know a lot about investing!

[Odin2005]

11. Didn'r JFK's dad say before the Great Depression...

...that he knew it was time to get out of the stock market when his shoe-shiner was giving stock advice?

When stock markets first started over 300 years ago they were never designed for the purpose of the average Joe punting money it them for retiremnet, they were for rich people to buy a part of a company and reap some of its profits.