Market Selloffs After Bad Jobs Reports Often Short-Lived

By

Stephen L. Bernard

Jun 3, 2011 3:32 pm ET

Friday’s ugly monthly employment report wasn’t the first instance in recent years that a jobs number has been so disappointing. So it’s worth asking this question: What happens to markets when the data is so bad?

After a few days, traders don’t really seem to care.

The biggest takeaway from Friday’s major miss — 106,000 off to the downside — should be that even though risk assets take an immediate hit, they bounce back before the next month’s employment report comes out, an indication of just how short most traders’ memories are.

There have been four other instances in the past 30 months when a monthly jobs number was more than 100,000 below expectations, and the Dow Jones Industrial Average was up on the eve of the next jobs report every time. The ICE U.S Dollar Index was down every time and Treasury yields have been higher three of the last four times, meaning prices for government bonds fell (the one outlier came during a month where data was skewed because of layoffs of temporary census workers).