NEW YORK (Reuters) – Markets always look to the Labor Department’s monthly employment report with great anticipation. But whether the data disappoints or surprises to the upside often has only a modest effect on overall stock index moves.
Friday’s report missed consensus by a mile, for example, showing the economy added a paltry 235,000 jobs instead of the 728,000 expected by economists.
But Wall Street seemed to largely shrug off the disappointment. The S&P 500 was essentially flat.
“Today it’s as simple as ‘bad news is good news’ because the weak number gives the Fed cover to maintain its dovish outlook and likely push back tapering,” said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina.
Detrick also pointed to strengthening yields as a reason the stock market is not terribly worried.
The yield on the 10-year U.S. Treasury note rose about 4 basis points to 1.3257% Friday afternoon on data in the jobs report showing wages heating up even more than feared. Even so benchmark Treasury yields are well below the highs earlier this year when traders were most worried about the U.S. recovery kindling durable inflation.
“This was on the disappointing side of things, but the bond market isn’t overly concerned,” Detrick added. “If the bond market was worried about the economy, yields would be lower and that’s not the case.”
The term “Goldilocks” is often used to describe data that hits the sweet spot; not so dire as to…