Strong Jobs Report Sends Dow Falling on Fed Worries

The DJIA is down as stronger economic data means increased risk of tapering.

Jan 8, 2014 at 1:30PM

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The Dow Jones Industrial Average (DJINDICES:^DJI) gave back yesterday's rise as better-than-expected jobs numbers for November and December have analysts worried about an increased taper from the Federal Reserve. As of 1:30 p.m., EST the Dow was down 78 points to 16,453. The S&P 500 (SNPINDEX:^GSPC) was down one point to 1,836.

There was one U.S. economic release today.

Report

Period

Result

Previous

ADP Private Sector Employment

December

238,000

239,000

ADP's National Employment Report showed the private sector added 238,000 jobs in December. That is above economists' expectation of a 215,000 gain, which was the previously estimated gain in November. November's private-sector employment data, though, was updated to 239,000 jobs added.

ADP Change in Nonfarm Payrolls Chart

ADP Change in Nonfarm Payrolls data by YCharts.

The Department of Labor is scheduled on Friday to release its nonfarm payrolls report, which includes both private and public-sector jobs. While the jobs numbers bounce around the long term story is unchanged -- the U.S. economy is steadily improving and continues to add about 200,000 jobs a month.

Some investors are worried that the strengthening job market brings us closer to the Fed further tapering its now-$75 billion monthly asset purchases and its reinvestment of proceeds. We will likely receive more information at 2 p.m. EST today when the Federal Open Market Committee releases the minutes from its December meeting. The fear is that the minutes will reveal far more hawkishness on the part of various members, or perhaps other surprises.

That said, investors should note that between the December and January meetings there is a rotation of commitee members. Leaving are three economic doves -- Chicago Fed chief Charles Evans, Boston Fed chief Eric Rosengren, and Kansas City chief Esther George -- as well as one hawk, St. Louis Fed chief James Bullard. Coming in are two Fed hawks -- Charles Plosser of Philadelphia and Richard Fisher of Dallas -- and two doves -- Narayana Kocherlakota of Minneapolis and Sandra Pianalto of Cleveland.

While four voting spots are changing hands, doves will still far outweigh hawks on the 12-person committee. We can expect that Fed policy of pumping money into the economy will remain unchanged even with the $10 billion monthly symbolic taper.

What's an investor to do?
I continue to believe the stock market is overvalued and that earnings look cyclically high. That said, predicting where the broad market will go in the short term is a game for fools (with a lowercase "F"). Stocks can always get more overvalued. When things get frothy, it's worthwhile to build up some cash on the side for when prices inevitably fall.

The Motley Fool has always taught that Foolish (capital "F") investors don't invest in the broad market. We invest in great companies at good prices, continue to educate ourselves, and hold on to our great companies over the long term. The market will fluctuate (sometimes massively), but great companies will win out over the long run.

Warren Buffett has made billions through his investing and he wants you to be able to invest like him. Through the years, Buffett has offered up investing tips to shareholders of Berkshire Hathaway. Now you can tap into the best of Warren Buffett's wisdom in a new special report from The Motley Fool. Click here now for a free copy of this invaluable report.

Dan Dzombak can be found on Twitter @DanDzombak or on his Facebook page, DanDzombak. He has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers