Coming out of labor day, the U.S. markets respond to global market activity on Monday that resulted in lower crude prices and a slight stabilization of European and Asian stocks. The weekend was lead by a jobs report on Friday that was lower than the estimate, but sufficient enough to drop unemployment 0.1%. In the second economic quarter, 170,000 jobs were added just 50,000 lower that the estimate at 220,000. What does that mean for the stock market? The labor market continues to reach for the optimal unemployment level of 5% with the possibility of rate hikes on the horizon. Investors seem fixated on the macroeconomic outlook of events like the Chinese recession and Federal Reserve interest rate increases. Overall sentiment surrounding global economic health is affecting stocks through volatile intraday swings seen through the major indices. The energy sector specifically has seen a lot of intraday and intraweek swings as its traders are forced to react to normal economic data beside low oil prices. Today, the forces appear to cancel each other out as the S&P 500 Energy Index gains just 0.7% in response to a 1.71% increase from the DJIA and a -1.69% loss from the WTI benchmark. The international Brent crude oil benchmark showed gains today rebounding from poor Chinese data presented the last week. Projections in future spending (government and corporate) bolster hopes that demand data has not really been endangered all that much. Nevertheless, volatility threatens the buying power behind recents gains in the crude futures market as well as energy companies across the globe. A closer look at the volume levels behind Exxon-Mobile and Chevron reveal a trend of volume decline of almost 50% over the past five trading sessions. XOM dropped from 24 million to just over 7 million, and CVX declined from 17 million to just under 7 million. Investors simply are not confidence in the finances behind the companies to establish a long position. Chances for growth are stemmed by the higher cost of borrowing money and revenue shorted by low energy prices. At the same time, gamblers on the movement of crude oil prices are trading bear as well as OIL, UCO, and UWTI all trade lower or remain unchanged with fundamentals staying the same. Overall, the market today was very quiet with no sectors trading over 2% silently waiting for the Fed to report their verdict. Stocks will continue to move under the macroeconomic scope as doubts over global growth are either quelled or fomented for the rest of the year. Those fears will be abandoned for the third quarter earnings reports later this year where the Fed and the stock market will make huge decisions on whether 2016 outlook looks bullish or bearish.
Stay tuned and trade the long-term trend.