Stocks Rise Before Earnings Season; Dollar Falls on Three-Year High; Unemployment Rate May Be Worse Than It Appears
Stocks Advance Before Earnings Season Begins (Bloomberg)
Stocks rose today, netting the S&P 500 its third straight day of gains, as investors waited for Alcoa Inc. (AA) to kick off earnings season. However, investors aren’t placing firm bets that second quarter earnings will show how strong the economy’s doing. “I really don’t think the earnings season is going to be so much about the second quarter, but more about the pickup in second half that the market appears to be anticipating,” Gary Flam, at Bel Air Investment Advisors LLC in Los Angeles, said. “The market is getting comfortable that the economy is strong enough to withstand reduced Fed support. The market is inching toward normalcy. We’re not in an abnormal environment where the Fed and Fed actions are dictating market movements.”
Dollar Retreats From Three-Year High (Reuters)
The dollar retreated from three-year highs against major currencies today, but expectations that the dollar will rebound later this week are promising, as last week’s strong jobs data bolstered prospects that the Federal Reserve will scale back its stimulus soon. “The dollar’s strength over the course of last week was especially swift. I think the speed was overdone and so this setback is normal,” said Ulrich Leuchtmann, head of FX research at Commerzbank. “Now markets are positioned to take profits from these moves, but this is simply a pause.”
The amount of underemployed workers is enough to cause concern, but it’s even worse when the government doesn’t do the counting. The Labor Department last Friday released its monthly nonfarm jobs report, and the underemployment rate (U6) — or the percentage of workers who have quit working as well as those who have had to take part-time jobs rather than work full-time — hit 14.3 percent in June. This number jumped from 13.8 percent in May. And Gallup reports even dire findings. Gallup’s report noted that 17.2 percent of the workforce is underemployed, an astonishing number since it’s the government’s count.