What a shocker in the September jobs report: 336,000 jobs created, way above 170,000 expected. And substantial upward revisions in the previous two months: August’s gain is now 227,000, up 40,000 from the prior estimate, while July went to 236,000, up from 157,000. Great news for job seekers, but a jolt to the market. Here’s the silver lining though: the issue everyone is most concerned about is inflation, and wage inflation is continuing to moderate. Average hourly wages were up 0.2% month over month, below consensus of 0.3%. Year over year, wages were up 4.2% , below 4.3% expected. So what do we have? We have job growth continuing strong, and wage inflation moderating. The 10-year bond yield is now trading around 4.82%, up 11 basis points. Seems to me bond yields are rising because the economy is staying strong. That would be good news for groups like cyclical stocks. And commodities. It is curious that copper and even beaten-up gasoline and oil are higher since the jobs report at 8:30 a.m. ET. Freeport McMoran, the huge copper and gold producer, a proxy for global growth, is trading up. Oil stocks like Occidental Petroleum are up, even as Exxon is down on reports of its interest in buying Pioneer Natural Resources . Some beaten up consumer names like Home Depot are down very small in early trading. Visa is up. And industrials like Caterpillar are up. I’m not trying to sugar-coat a jobs report that was a surprise to all of us. I’m just looking at the market and trying to explain why certain sectors are doing much better than others. Maybe this report is not such a catastrophe.
