U.S. unemployment, European bailoutAfter what seems like an eternity in the doldrums, the stock market came to life this week as investors bet that the economy wouldn't be as bad as had been priced in. After falling on Monday, the Dow Jones Industrial Average (INDEX: ^DJI) posted a big gain over the next four days.

This week, the ISM Index, a gauge of manufacturing activity, rose more than expected. Construction spending grew, as opposed to contracting, as analysts expected. And Europe started to get its act together on a massive bailout fund.

But as usual, it all starts with unemployment.

It's All About Jobs

The biggest report of the week came out Friday morning, when the Labor Department announced nonfarm payrolls for September.

Overall payrolls rose by 103,000, higher than the 60,000-worker gain economists were expecting. The private sector pulled more than its fair share, adding 137,000 jobs as government workers continue to take the brunt of budget crunches around the country.

The Labor Department also revised July and August payroll numbers up a total of 99,000.
This continues a trend of OK but not great economic data in the U.S. as we teeter on the brink of another possible recession. With unemployment stuck at 9.1% it's going to be hard to see a meaningful improvement in the economy until more workers begin working.

Right now, it's as if 90% of the economy is rolling along like a well-oiled machine while 10% is left in the dust. This isn't unusual in the wake of a recession driven by debt and a banking collapse, but it won't feel like a real recovery until more of the economy is included.

Oil Is On a Comeback

Earlier this week, I talked about how Europe's bailout plans and unemployment would rule the week on the market. Well, the news out of Europe midweek was positive and oil was the biggest beneficiary of the market's sigh of relief.

Oil bottomed at $75 Tuesday, but climbed as high as $84 today, driving many energy stocks higher. On the S&P 500, three of the biggest winners were Marathon Petroleum (MPC), Tesoro (TSO), and National Oilwell Varco (NOV), all of which saw their share prices climb at least 12% over the past week.

This week's recovery in the stock market and oil prices doesn't mean Europe is out of the woods, but we may be seeing a light at the end of the tunnel. Slovakia and Malta are the only holdouts keeping the bailout from moving forward, and there's hope that they could vote on ratifying an agreement next week.

Then we move on to a possible orderly default in Greece, which will probably drive the market for the next six months.

Singing the Tech Blues

While oil was screaming higher on hope the economy would recover, concern that PC spending will be weaker than expected sent semiconductor companies south this week.

Research company Gartner said semiconductor sales would fall 0.1% this year, reversing from a previous estimate of 5.1% growth. That helped send shares of Micron Technology (MU) and Advanced Micro Devices (AMD) lower this week.

Loss of a Legend

In reviewing the macroeconomic events of the week, I would be remiss if I didn't mention the loss of Steve Jobs, a worldwide business icon. He built not one, but two businesses into multibillion-dollar empires -- Apple (AAPL) and Pixar -- and revolutionized the computer, the phone, and the music industry, just to name a few.

Jobs was just one man, but he had a greater impact on business and our economy than anyone else in my lifetime. He will be missed.

A Good Week, but Not Great

Depending on your preferred perspective, you could see positives or negatives in the economic data this week. It isn't like we're blowing the economic indicators out of the water, but we aren't in a tailspin, either.

Improving factory activity and a steady gain in jobs are some much-needed positive news heading into earnings season. Next week, we'll find out what all of this economic data means for businesses when they begin reporting earnings.

Motley Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool. The Motley Fool owns shares of Apple and National Oilwell Varco. Motley Fool newsletter services have recommended buying shares of Apple and National Oilwell Varco, as well as creating a bull call spread position in Apple.


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24 Comments

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Tristan Tandberg

I am staying out of the markets, it should stay about 10 for short term, but it is so up and down

here is a funny joke I saw about the government bailing out the collectibles market, http://ponderingstuff.com/2011/11/09/governmentand-collectors-market/

November 12 2011 at 5:37 PM Report abuse rate up rate down Reply
ADAMP791

CORPERATE STATES OF AMERICA !! IN CHINA WE TRUST !!

October 10 2011 at 1:34 PM Report abuse +1 rate up rate down Reply
SPQR

There is no reason to believe that anything will happen. Nothing has changed even if Europe is bailed out. People are still broke. OVer the next decade if the US is making even less then we have nothing to sell the rest of the world except a Bernie Madoff style pyramid scheme again. Maybe we can reintroduce the pet rock again.
This story is just like the hundreds that have preceded it before. Oil was through the roof because they pushed that a major recovery was going to happen. It didn't! By Friday there will be some new news that Spain ran out of olives and wine and the market will crash again. The brokers will will already have their short sales in place and make money probably off your 401K plan. When was the last time you saw a lawnmower made in the US? That creates real jobs. As long as there are jobs overseas where the actual product costs nothing then there will never be a recovery here. We need to look at sustainability to maintain what we have and its not looking good. EVENTUALLY oil will be so expensive that we will have to make out own products again. It takes a lot of fuel to send all those ships here from China

October 10 2011 at 12:42 PM Report abuse rate up rate down Reply
2 replies to SPQR's comment
warrenbent

Ummmmm, Craftsman, remington, yard Machines, and Snapper lawn mowers are all made in the USA.

But don't let any fact get in your way!

October 11 2011 at 8:37 AM Report abuse rate up rate down Reply
wfreeberg

You could probably add to that that we should stop selling the billions of dollars of Agriculture products to China also.

October 11 2011 at 12:11 PM Report abuse rate up rate down Reply
krazzicraig

Many do not know they can invest without wall street. 40 years ago I wanted to invest. in something, but what. Then it came to me. I was at a store and a clerk what products they keep selling out of. Back then one had to pick up a phone and call the company you had an interest in. I made a few calls and was surprised at how willing these companies were. No wall street ,no broker , no fees. Understand , I was looking for long term investments . I did not have alot money at the time . It became a slow yet steady source of income. Over 40 years it has turned into a very nice retirement income. Never in 40 years have I used a broker or wall street. NEVER. Why pay someone to do what you can do youeself for free.

October 10 2011 at 11:52 AM Report abuse rate up rate down Reply
steve thompson

The dow will go down like pushing a safe from atop a 20 story building...My money is out, pulled, I no longer participate in it. I sleep better at night.

October 10 2011 at 11:18 AM Report abuse rate up rate down Reply
mscellanus

How come the protesters don't go to Washington and protest against Congress and all the corrupted politicians? The maljority of these folks are millionaires. How about letting them share their wealth with all of us?

October 10 2011 at 11:09 AM Report abuse rate up rate down Reply
bchrist751

OIl went up because the dollar weakened ..... If people would take the time to learn what causes, in this case oil to move one way or another, you would be better off.

Last week one end I heard someone say that the reason that SS is broke is because the payroll taxes were invested in the Stock Markets.... NO, SS is broke because the Money was placed in the general fund and spent!

Remember that saying BS in BS out!

October 10 2011 at 10:34 AM Report abuse +1 rate up rate down Reply
amani4000

Of course oil goes up too, greed doesn't rest for long. The jobs created were mostly low paying in the service sector, we need 200,000 a month for six months straight before we see a real improvement in the economy. Every time the job figures are "corrected" each month, the results suck. Just an excuse to suck every cent they can from us. When will the game of LIES stop??

October 10 2011 at 10:16 AM Report abuse +1 rate up rate down Reply
2 replies to amani4000's comment
bchrist751

amani when american wake up and understand that they are being lied too....

October 10 2011 at 10:42 AM Report abuse rate up rate down Reply
bchrist751

America is a nation of Service Sector jobs..... Also, a large percentage of American workers cannot fill the Jobs we do have because they are not qualified. their skills have not keep with with technology.

October 10 2011 at 10:45 AM Report abuse rate up rate down Reply
Nattxn

Take out the verizon walkouts and you come up with a paltry 58k.

October 10 2011 at 10:15 AM Report abuse +1 rate up rate down Reply
1 reply to Nattxn's comment
mscellanus

Exactly! They conveniently leave out that thousands of strikers from Verizon went back to work.

October 10 2011 at 11:07 AM Report abuse rate up rate down Reply
Pam Miller

Not even worth reading or following. 103,000 of what KIND of jobs? Jobs people can support themselves or a family on? Career job, or a temp position?

October 10 2011 at 9:49 AM Report abuse +2 rate up rate down Reply
1 reply to Pam Miller's comment
warrenbent

Pam, while I'm sure there are some temporary workers in these number, the report indicated these were not a preponderance of the new jobs. For one, the number of weekly hours per worker increased to 34.3 from 34.2 in August, which implies less part-time work and more full-time, in contrast to the common "McJobs" refrain.. Also, average weekly earnings increased 0.5% in September, and are up 2.1% versus a year ago.

This report doesn't mean all is rosy again. Unfortunately, the economy is "sailing against the wind" of a massive increase in the size and scope of government. The headwind of an unprecedented 25% of our nations GDP being consumed by the Foggy Bottom goons robs the private sector of resources.

But thanks to at least a remaining semblence of free enterprise, our economy also remains resilient to withstand such attacks. This report is a positive step. Many more of them will be required before becoming overly optimistic. But it's still a positive report.

October 10 2011 at 10:16 AM Report abuse -1 rate up rate down Reply