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Economy adds jobs

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This morning's Labor Department showed that the jobless rate fell to 5.5% in February, which is a positive surprise as economists were expecting the unemployment rate to actually rise to 5.8%. The better-than-expected labor report shows that 66,000 workers were added to payrolls in February (consensus was for +12,000), the first gain in non-farm payrolls since July, and the strongest gain in a year. Approximately 1.3 million jobs had been lost in the previous six months.

Economists will warn that the payroll numbers likely overstate the strength of the labor market because of statistical anomalies, but the report does suggest that conditions in the labor market have at least stabilized and may be improving.

Most of the job gains came in the retail sector, which added 58,000 jobs. Labor officials point out that the retail sector did not add jobs as normal during the holiday season, but the sector didn't layoff employees during January either. The low number of layoffs in the first two months of the year showed up as increases when the numbers were adjusted. The Labor Department said if you exclude the retail sector, employment on net was little changed in February.

Stock futures higher as are bond YIELDS

Stock futures are trading higher this morning as S&P futures gain 9 points, NASDAQ futures are up 25 and Dow futures are gaining 84 points.

Fair value for the S&P 500 today is $2.97. HL Camp & Company has their computers set for program buying at $4.52 and set for selling at $1.56. Fair value for the NASDAQ-100 today is $9.90.

Treasuries are seeing selling across the board as the 10-year YIELD ($TNX.X) jumps to YIELD 5.308%, the highest YIELD for this bond since December 17th of last year. The selling in today's bond market comes just after yesterday's comments from Fed Chairman Alan Greenspan declaring the recession being over.

Jeff Bailey
Senior Market Technician
Option Investor

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