Courtesy of John Nyaradi.

A downbeat August non-farm payrolls report fueled the stock market through most of Friday’s session as doubts were raised about a September taper.

Friday’s big news for the stock market was the August non-farm payrolls report from Department of Labor’s Bureau of Labor Statistics.  The report would provide the last batch of economic data to be reviewed by the FOMC before its September 17-18 monetary policy meeting, at which point it will vote on whether to taper its bond-buying program.  The BLS reported that total non-farm payroll employment increased by 169,000 new jobs in August, falling 11,000 jobs – or 6 percent – short of economists’ expectations for 180,000 new jobs.  Beyond that, the July total was revised downward by a whopping 35.8 percent from 162,000 new jobs to a mere 104,000 jobs.  The month of June was not ignored, as its total was cut by 8.5 percent from 188,000 new jobs to 172,000 jobs.

Although the unemployment rate dipped to 7.3 percent from 7.4 percent, the decline was due to the fact that the labor force participation rate declined from July’s 63.4 percent to 63.2 percent in August, reaching its lowest level since July of 1978.

The three major stock indices spent most of Friday’s session in positive territory, as investors felt encouraged that the “Septaper” would not proceed as feared.  However, the S&P 500 finished the session relatively flat and the Dow was actually 14 points into the red, following reports of Russian President Vladimir Putin’s threat to have Russia assist Syria if the nation was attacked by the United States.  What the Fed’s Tapering Will Do to Automakers and More

The Dow Jones Industrial Average (NYSEARCA:DIA) lost 14 points to finish Friday’s trading session at 14,922 for a 0.10 percent decline.  The S&P 500 (NYSEARCA:SPY) rose 0.01 percent to close at 1,655.

The Nasdaq 100 (NASDAQ:QQQ) advanced 0.11 percent to finish at 3,133.  The Russell 2000 (NYSEARCA:IWM) rose 0.08 percent to end the day at 1,029.

In other major markets, oil (NYSEARCA:USO) soared 1.73 percent to close at $39.36.

On London’s ICE Futures Europe Exchange, November futures for Brent crude oil advanced 61 cents (0.54 percent) to $114.18/bbl. (NYSEARCA:BNO).

December gold futures climbed $18.40 (1.34 percent) to $1,391.40 per ounce (NYSEARCA:GLD).  Supply and Demand Metrics Suggest a Bright Future for Gold Ahead

Transports were stuck in dry-dock on Friday, as the Dow Jones Transportation Average (NYSEARCA:IYT) declined 0.24 percent.

In Japan, stocks fell as investors decided to take their profits and run after four positive sessions.  The yen strengthened to 99.72 per dollar just before Friday’s closing bell in Tokyo.  A stronger yen causes Japanese exports to be less competitively priced in foreign markets (NYSEARCA:FXY).  The Nikkei 225 Stock Average sank 1.45 percent to 13,860 (NYSEARCA:EWJ).

In China, the shipping sector led a healthy advance on expectations that the Shanghai Free-Trade Zone, which was approved by the State Council in August, will open before the end of September.  The Shanghai Composite Index surged 0.83 percent 2,139 (NYSEARCA:FXI).  Hong Kong’s Hang Seng Index advanced 0.10 percent to end the session at 22,621 (NYSEARCA:EWH).

In Europe, the major stock indices advanced from a relatively flat trading session after the release of America’s downbeat non-farm payrolls report raised hopes that the taper of our quantitative easing program would not begin this month (NYSEARVA:VGK).  The Euro STOXX 50 Index finished Friday’s session with a 1.05 percent jump to 2,803 – climbing further above its 50-day moving average of 2,746.  Its Relative Strength Index is 54.92 (NYSEARCA:FEZ).

Technical indicators revealed that the S&P 500 failed to break above its 50-day moving average of 1,664 after finishing Friday’s session with a 0.01 percent advance to 1,655.  At this point, a head-and-shoulders pattern is still present on the S&P chart, from the period beginning in early May through the present.  The S&P will need to cross above its 50-day MA to break the neckline of the pattern.  It almost did so on Friday.  (There already had been a pinhead-and-shoulders pattern running from the period beginning on July 10 through August 16.)  Its Relative Strength Index rose from 48.48 to 48.52.  Although the MACD is below the zero line, it is headed back upward and is poised to cross above the signal line.  If it does so, the move will be seen as an indication of a likely advance.

For Friday, four sectors were in positive territory, four sectors were in negative territory and the financial sector was unchanged, making it an even split.  The utilities sector led the group with a 0.71 percent advance.

Consumer Discretionary (NYSEARCA:XLY):  -0.12%

Technology:  (NYSEARCA:XLK):  +0.06%

Industrials (NYSEARCA:XLI):  -0.04%

Materials: (NYSEARCA:XLB):  -0.12%

Energy (NYSEARCA:XLE):  -0.01%

Financials: (NYSEARCA:XLF):  unchanged

Utilities (NYSEARCA:XLU):  +0.71%

Health Care: (NYSEARCA:XLV):  +0.04%

Consumer Staples (NYSEARCA:XLP):  +0.25%

Bottom line:  Although stocks got a midday boost on expectations that the Septaper would not proceed due to the downbeat non-farm payrolls report, Vladimir Putin spoiled the party with his threat to assist Syria in the event of a U.S. attack.  

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