This has been a historic week for the markets. Thanks to Hurricane Sandy, for the first time in more than 25 years, the equity markets closed for weather-related reasons on Monday and Tuesday. A day after they reopened, they shot up with a vengeance, with the Dow Jones Industrial Average (^DJI 0.72%) finishing yesterday up more than 100 points (click here to read why). However, if today's trend continues, much of these gains will be given back: The Dow has slipped 114 points, or 0.87%, as of 2:50 p.m. EDT.
The biggest news today was paradoxically positive. Data released this morning by the Bureau of Labor Statistics estimates the economy added 171,000 jobs last month, beating economists' consensus forecast of 125,000. According to a senior strategist quoted by The Wall Street Journal, "Overall, this report is consistent with the emerging picture of an economic recovery that is continuing to regain traction after grinding to a halt earlier this year."
Despite this, there were a number of ominous signs in the report that traders appear to have clung to. In the first case, the unemployment rate increased by 10 basis points to 7.9%. Second, the so-called "real unemployment rate" -- which includes people who are both unemployed and underemployed -- remains elevated 14.6%. And finally, both the average hourly earnings and the average hours worked fell from the month before. An economist at Morgan Stanley (MS 1.73%) referred to these as "dark clouds."
In other news, three of the Dow's component companies reported earnings this week. After delaying its release due to Hurricane Sandy, Pfizer (PFE 0.21%) reported results yesterday. In a trend that's becoming all too familiar, the pharmaceutical giant beat estimates on the bottom line but missed on the top as sales of its formerly lucrative cholesterol drug, Lipitor, fell off a cliff after the drug lost patent protection at the end of last year.
Oil giants ExxonMobil (XOM 0.15%) and Chevron (CVX 0.20%) followed suit. Both companies reported dramatic declines in their top and bottom lines from the same quarter a year ago. In Chevron's case, its profits fell by a third, and its revenue by a tenth. The industry is fighting headwinds in production volume and price fluctuations, given the market uncertainty owing to Europe and the fiscal cliff here at home.
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