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March 10, 2006
Zig zags after the jobs report
The jobs report for February came in slightly stronger than expected, showing a healthy 243,000 new jobs were created last month. That's had a predictable impact on bonds (they're down on fears for further Fed rate hikes) and the dollar (it's up on hopes for further Fed rate hikes). But the stock market after first heading down, is now taking off. Even more strangely, banks and other financials are leading the charge. I'd say the oversold condition in stocks was more at odds with the fundamentals than the similar set-up in the bond market.
p.s. Looks like Morgan Stanley's David Greenlaw was wrong even though he was right. As noted yesterday, Greenlaw thought the labor market was quite strong but predicted a weak February jobs report due to weather effects and an overhang from the strong January performance. Instead, the January report was revised downward slightly and February showed strength.
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