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The Improved Employment Rate Is Holding U.S. Stocks at Record Levels

Posted on 12/08/2014

CNBC

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Magii Inc., one of New York's most renowned wealth-management firms, specializes in helping businesses and individuals generate and maintain financial prosperity. The company provides insight into how U.S. stocks are reaching record highs as a result of increased employment rates.

Wealth management strategists are excited about the latest job growth report. While fewer workers were hired than the October forecast projected, the unemployment rate is currently the lowest it has been in six years. This lends to the belief that the economy is surviving a slowdown overseas. While valuations may be difficult because of slow growth, expectations of an optimistic employment report have caused the market to rally in response.

Non-farm payrolls reached 214,000. The Dow Jones Industrial Average responded with an increase of 18.88 points. Although the Nasdaq Composite Index reported a 0.1 percent drop, the Standard & Poor's 500 Index (SPX) climbed by slightly less than 0.1 percent. This implies a steady move toward pause, which gives time to digest the economic state of the last few weeks.

The unemployment rate dropped to 5.8 percent, signaling employer confidence that the economy will withstand the struggles of emerging and European economies. While slow growth of the payrolls report is mildly disappointing, there is little doubt about its continual growth. Central banks are preparing to aid economies suffering below-target inflation and mild growth.

At the quickest speed in four years, the earnings estimates of analysts were beaten back by companies to result in a 9 percent rebound for the S&P 500. As the latest results for this quarter come in, 80 percent of S&P 500 members are reporting revenues exceeding initial projections. Another 60 percent have topped original sales estimates.

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