Stocks rose in early afternoon trading on Wall Street, impelled by hopes that the Fed may defer scaling back its monetary stimulus after August’s job data failed to meet expectations. It has been a volatile day though, with the Dow plummeting nearly 150 points at one point. By early afternoon in New York, the Dow was up 0.27% or 40 points at 14, 978 and the S&P 500 had gained 0.37%.
The Dow had opened strongly in a case of bad news equals good news, on the back of payroll data that undershot estimates. Payrolls for August increased 169,000, below the consensus estimate of 180,000 given by a Reuters survey of analysts. There was a significant downward revision to July’s numbers, slashed down to 104,000 from the 162,000 that had originally been reported.
The unemployment unexpectedly fell to 7.3% from 7.4%, but the waning number of people looking for work is at least a partial cause of the drop in the unemployment rate. The size of the downward revisions to previous months (June was also amended) puts the ball back in the court of the doves at the Fed, who will now have plenty of ammunition with which to argue that tapering should not begin at the next FOMC meeting.
Stocks plunged lower after reports that Russia would ‘assist’ Syria in the eventuality of a military strike by the US and would consider such an incident as being an act of aggression. Stocks recovered when it was clarified that Russia would maintain its supply of arms and aid in the event of an attack.
At a press conference, President Obama claimed that foreign leaders at the G-20 were largely aligned with the US viewpoint. He refused to be drawn on whether he would act if he failed to win approval from Congress.