WEAK JOBS REPORT LOWERS ODDS FOR SEPTEMBER RATE HIKE -- STOCKS LIKE THE NEWS -- TWO-YEAR TREASURY YIELD DROPS -- WEAKER DOLLARS LIFTS COMMODITY PRICES AND STOCKS TIED TO THEM -- EMERGING MARKETS LEAD FOREIGN BOUNCE -- DOW INDUSTRIALS BOUNCE OFF CHART SUPPORT
DISAPPOINTING JOBS REPORT... This morning's August jobs report saw a gain of 151,000 jobs versus estimates for a gain of 180,000. That low number is giving a boost to stocks, and helping to unwind some of the recent hedges against a possible September rate hike. Most of today's intermarket moves are consistent with the weak report. The two-yield Treasury note dropped along with the dollar. The weaker dollar is boosting commodity prices and stocks tied to them. Gold and energy shares are helping lead the market higher. Rate-sensitive stock groups like utilities are rebounding. Foreign shares are also rising, especially emerging markets. Energy sensitive stock ETFs in Latin America and Russia are leading the advance. The CBOE Volatility Index is dropping nearly 10%. One surprise is a jump in the ten-year Treasury yield. That may explain why bank shares are holding up okay. Chart 1 shows the Dow Industrials bouncing off initial chart support at its 50-day moving average and its early August intra-day low at 18247. Daily MACD lines (above chart) are starting to converge but are still negative. A positive crossing by the two lines would lend more support to today's bounce. We'll let today's initial reactions play themselves out an take another look over the weekend.