Employment Situation Shows Signs of Life

Wall Street finished mixed on Friday after positive signs from the employment situation competed with rising yields in the bond market. The Dow rose 12.89, or 0.2 %, to 8,763.13. The Standard & Poor’s 500 index fell 2.37, or 0.3 %, to 940.09, and the Nasdaq composite index fell 0.60, or less than 0.1 %, to 1,849.42. Stocks look to keep the momentum heading into the next trading week as the blue chips introduce two new components, replacing the bankrupt GM and Citigroup.

The Dow Jones industrial average closed the week up 262.80, or 3.1 %. The Standard & Poor’s 500 index rose 20.95, or 2.3 %, while the Nasdaq composite index rose 75.09, or 4.2 %.

May Employment Situation

The Labor Department said employers cut 345,000 jobs in May, far less than the 520,000 economists predicted, a hopeful sign for the job market. But the report also showed that the unemployment rate surged to 9.4 % from 8.9 % in April. Estimates ranged from declines of 450,000 to 600,000. Job losses peaked at 741,000 in January, the most since 1949.

Including those who’ve stopped looking for work because they are discouraged by employment prospects and those working only part-time who prefer a full-time job, the real unemployment rate jumped to 16.4 % in May.

Cramer’s Take…Yes he is Still Allowed on the Air

The Lehman Brothers collapse was an eye-opener for everyone, not just the financial sector. When that comet hit, CEOs across the entire economic spectrum adopted a bunker mentality and started to make massive cuts in preparation for a worst-case scenario. The first and most obvious target was the workforce, and companies slashed jobs big and deep.

Thanks to responsive governments the world over, though, a second round of layoffs wasn’t needed. Stimulus programs spared us that trouble, and President Obama’s decision to save General Motors and Chrysler – and as a result, their suppliers – was a big help, too. This prevented the U.S. unemployment rate from reaching Great Depression levels, which were 33%, and instead kept us under 10%. All this despite the near collapse of the entire financial sector, a bursting housing bubble, retail’s decline and those problems in Detroit.

Not bad, right? At least that’s how the market saw it. And that’s why stocks finished the day in positive territory. But overall there are now fewer people in danger of foreclosure, though more are able to spend money and pay taxes.

Jim Cramer talks so much out of both sides does he really even know if he is coming or going? The employment reading was positive news, but what is going on in the bond market is much more worrisome as the bond vigilantes are calling out the Fed and administration.