What the numbers is going on at the Labor Department? The department says the number of jobs created by firms in October was 92K, versus expectations of 123K. So it’s a disappointment for Wall Street. But then the payrolls for August and September are revised upwards; the September numbers bumped to 148K from the 51K announced on October 6. What?! That’s almost triple the October announcement.
This huge discrepancy doesn’t really make the headlines as much as the absolute numbers but can someone remind the Labor Department that the markets do react to these numbers, especially at times like these when economic indicators continue to give conflicting signals. As someone commented on CNBC, investors already have a long list of risks to contend with; “statistical risk” should not be added to these.
Anyway the market ends a five-week winning streak. Geopolitical concerns induce a jump in oil prices that rattles investors already jittery from confusion about the strength of the economy. The Dow shows no green at all this week while the Nasdaq again gives up some of the stellar 4.79% gain made last month.
It’s been a dismal start to November for Wall Street. All hopes of a rally in equities now rest on stronger indications of higher consumer spending during the holiday season.
To boost sales over the holiday period Wal-Mart (WMT), whose sales stagnated last month, comes out of the left field with a decision to cut prices for many electronics. The decision knocks COST for six as many investors interpret the WMT move as the declaration of a price war. Many “big-ticket” items sold by COST are electronics.
COST already operates on ultra thin margins – less than 2.7% versus 5.9% for WMT. So this WMT move is undoubtedly a challenge for all discount retailers, even WMT itself. Honestly, I don’t really see much room for maneuver for COST in terms of price cuts.
Although COST is the nation’s largest warehouse discounter – it sells more than WMT’s Sam’s Club - it probably will have to hold its ground on prices, take some losses on the sales front this holiday season, and then recoup these losses from the membership fees it charges.
The market thumps for the week but the folio still manages to scrape a tiny gain, helped by IGE and SLV’s gains from the rise in oil prices.
Worst-Known +0.06%
Nasdaq -0.84%
Dow -0.86%
S&P -0.95%
From next week the market will be completely at the mercy of economic data. The earnings season will be "gone with the wind".
Oh, do I think the elections on Tuesday will dramatically impact the markets? No! Although there are more Republicans than Democrats on the Street the rich still set the rules in America, and the last time I checked Congress is still part of America.
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