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Financial News Overview

7/2/2009

Yesterday, we noted that today's scheduled release of the June jobs report might have a market moving impact. This is exactly what happened, as the news of sizable job losses in June had an immediate and strong impact, driving the major indexes sharply lower. The US employment rate reached a 26-year high, with the current jobless rate now at 9.5% (up 0.1% from May). Whereas the increase in the unemployment rate was relatively slim, it was the extent of additional job losses that startled and spooked investors. According to the Labor Department, the US economy lost 467,000 jobs in June, a number that far exceeds the 363,000 job losses economists had been projecting.

Because the jobs report is one of the most closely watched economic data releases, today's dour news from the employment front put a damper on investor optimism. In recent months, investors have become more positive about the pace of the US economic recovery, as some positive 'green shoots' have been seen emerging in areas such as housing and manufacturing. Today's employment data shows however that the US economy is still struggling. Consumers who lose their jobs are unlikely to lead the country out of recession. Some market observers believe the recent market rally has no solid fundamental underpinnings and is unlikely to continue for that reason.