On Thursday we saw what happened when a momentum-driven stock rally hit the
reality of crude oil eclipsing $106 a barrel a mostly flat day for the market.
On Friday we saw what happened when another two-and-a-half-year high in crude
oil is trumped by a decline in unemployment. In other words, your guess as to
what happens next is as good as anybodys. Stocks pushed modestly higher on
Friday, with the Dow Jones Industrial Average hitting an intraday high for 2011
before settling back to gain only 57 points to 12,377. The Nasdaq added 9 points
to 2790 and the S&P 500 gained 7 points to 1332 the S&P 500 is now within 1% of
its closing high for 2011. Whether you consider Fridays jobs report as a
thoroughly positive report, its without question that the data set a positive
tone for the market. The economy added 216,000 jobs in March above Wall Street
expectations and the unemployment rate fell to 8.8%. Even the fine-printers who
usually cite the oft-flattish (or worse) employment-to-population ratio as
a reason to not get excited about the labor market (and rightfully so) had to
admit that the 58.5% level is the economys highest since last September.
However, this rally clearly has a lot going for it, not the least of which is
the ability to shrug off minor irritants of unpleasant news that one would
objectively think could give investors pause. The jobs report, for example, it
doesnt seem hugely positive that the data showed wages have basically not moved
for two months consult your recent food and energy bills for confirmation that
this could be a problem for consumer demand down the road. Economic recovery,
OK, resurgent economic recovery? Well, not quite. But investors also enjoyed the
good fortune of a sweetened bid for NYSE Euronext (NYSE: NYX ) giving financial
stocks a lift on Friday, an overall favorable reaction to monthly automobile
sales Ford (NYSE: F ) gained 1.7%, General Motors (NYSE: GM ) climbed more than
4% and lets not forget, a first-day-of-the-month Friday after an end-of-quarter
runup all week. What to expect next week? One could objectively think that a
tipping point in stocks will come if the trend in crude oil continues. But with
all that has failed to stop the two-week rally, it doesnt seem like an ideal
time to fight the market.
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