Unemployment Rate Drops and Dow Jones Jumps

The unemployment rate dropped to 6.6%, but a weak jobs report is pushing the Dow Jones today up as investors believe the Fed will taper slower.

Feb 7, 2014 at 1:32PM

The Dow Jones Industrial Average (DJINDICES:^DJI) is up 117 points to 15,745 at 1:30 p.m. EST, following a January jobs report in which the unemployment rate dropped slightly but the number of new jobs was significantly less than expected. The S&P 500 (SNPINDEX:^GSPC) was up 16 points to 1,789.

There was was one U.S. economic release today.





Non-farm payrolls



75,000 (r)

Unemployment rate




The unemployment rate has been steadily falling but the jobs reports have been weak. The Labor Department's previous report initially showed the economy added just 74,000 jobs in December. Many analysts were hoping that was a temporary blip, but the latest numbers show jobs growth is slowing.

US Change in Nonfarm Payrolls Chart

US Change in Nonfarm Payrolls data by YCharts.

December's number was only revised up by 1,000 jobs to 75,000 jobs added that month. January's number was better at 113,000 but well below the 175,000 some analysts expected (other economists had projected 189,000 added jobs). Some have attributed the weak numbers to the rough winter the country is facing. With two polar vortexes sending freezing temperatures down as far as the Gulf of Mexico there may be some credence to this. In the northern U.S., for example, Minneapolis canceled school for the first time since 1996 as temperatures hit a low of -30, (-50 with the wind chill). Other parts of the nation have also been hit by snap colds and blanketed with snow.

Three inches of snow in Atlanta last week left many motorists stranded for long hours. Major retailers pitched in by allowing stuck commuters and others places to sleep on their floors. There aren't many job interviews going on in this kind of situation.

Meanwhile, the unemployment rate continues to fall as people leave the workforce. The unemployment rate hit a five-year low in January of 6.6%.

US Unemployment Rate Chart

US Unemployment Rate data by YCharts.

The market is up today as some investors believe the Fed will be less likely to continue to taper its long-term asset purchases if jobs growth continues to stay low. That's possible if the jobs market is actually getting weaker, but as it appears to just be a temporary lull from the poor weather I expect the Fed to continue to taper. With the central bank purchasing fewer long-term assets each month, I expect rates to stay above last year's level and profit growth to be challenged.

For me, the story remains the same. The economy continues to slowly grow, the jobs market is getting healthier, and the market is still overvalued.

What's an investor to do?
In any event, your investment strategy shouldn't be dependent on a few economic reports. Constantly educate yourself, find great companies, and invest for the long term.

As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information

Compare Brokers