This morning the major stock market indexes are slightly under pressure after the weekly initial jobless claims report was slightly worst than expected. While this economic news is important most traders and investors will have their eyes fixed on tomorrow's government July job report that will be released at 8:30 am EST.
Economists are looking for growth in the private sector to increase by 80 thousand jobs. When you think about the month to month revisions and the amount of people that have fallen off the unemployment list who can really make heads or tails of this report. There is also a fair argument that the report is inaccurate and the numbers are never correct anyway. However, for some reason Wall Street loves this report and an initial reaction is imminent after the announcement.
Today many retail stocks reported there yearly comps and many of these stocks are trading lower today. This report is a better barometer for the economy than the monthly job report. The entire inflation rally that the Treasury and the Federal Reserve Bank are planning on will only last if the consumer begins to spend money. It is important to remember that consumer spending accounts for 70 percent of the gross domestic product in the United States.
Today the retail sector is mixed as some stocks such as Kohl Corp (NYSE:KSS), and Target Corp (NYSE:TGT) are trading higher on the trading session. Other leading retail names such as Nordstrom Inc (NYSE:JWN), and J.C. Penney Inc (NYSE:JCP) are trading lower today. When the retail stocks trade sharply higher and rally for an extended period this tells us that the U.S. consumer is spending and feeling better about the economy. When the retail sector lags and trades poorly this tells us that the U.S. consumer does not believe that the economy is strong. Just look at how the retail sector traded during 2009. It was very strong and so was the market. Now look at how the retail sector has traded during 2010 and you will see that this sector has been weak. As you may have noticed the overall stock market has been weak in 2010.
Nicholas Santiago
Chief Market Strategist
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Everyone Awaits the July Job Report
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