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The Dow Jones Industrial Average is soaring following today's payroll's report. In today's Morning Movers, we...

•...offer one reason why the market loves today's payrolls report;

•...highlight Lowe's (LOW) dividend increase;

•...and explain why Petrobras (PBR) is getting crushed.

A Little Good News Goes a Long Way



Good news for Wall Street. Even though jobs growth beat expectations in May, the workers still aren’t able to squeeze big pay raises from their employers.

That should be good for corporate earnings, so long as it lasts. No wonder the Dow Jones Industrial Average jumped more than 200 points Friday morning, the S&P 500 rose 1%, and the Russell 2000 small cap index rose 0.7% to a new record. Rising stocks outnumbered falling ones by about eight to three. Annual wage inflation was 2.7% in May, according to the latest jobs report.

Price inflation during the same month? About, oh…2.7%, estimates the Cleveland Federal Reserve.

In other words, in real, purchasing power terms workers haven’t received any raise at all in the last twelve months.

Naturally, you don’t hear this from many of the talking heads on the Street.

Friday morning they were all saying what a big number 2.7% was, because it “beat expectations.” All that really means, of course, is that the expectations were wrong.

If these talking heads think a 2.7% nominal pay raise is a big number, let’s see how they react when their own employers at the big banks and investment companies offer them a 2.7% pay raise this year.

I’d love to be a fly on the wall.

Actually, this 2.7% nominal number is pretty much in line with the last couple of years. Nominal wage inflation has been averaging 2.6% a year since at least the summer of 2016, and it has risen to 2.7% and even 2.8% for the occasional month throughout. Meanwhile, during that time consumer price inflation has doubled.

Ten-year Treasury yields jumped 0.07 percentage points to 2.9%, but so far remain a long way below where they’d be if real wage inflation were a genuine worry.

S&P 500: +1.1% to 2735.44

Dow 30: +241.41. or 1.0%, to 24,657.25

Nasdaq: +1.5% to 7554.32

Vix: -12.3% to 13.53

10-year Treasury Yield: +0.08 percentage point to 2.9%

Midday Movers



Lowe's (LOW) is up 1.1% to $96.05 after raising its dividend 17%.

Marvell Technology (MRVL) is up 2.7% to $22.11 after reporting first-quarter earnings. The chip maker earned 32 cents a share on revenue of $604.63 million. Analysts were looking for earnings of 31 cents on revenue of $601.85 million. For the second quarter, it sees EPS of 32 cents to 36 cents, on revenue of $600 million to $630 million. Consensus calls for earnings of 33 cents on revenue of $621 million.

Newell Brands (NWL) is down 3.4% to $22.78 on news that its chief financial officer will retire.

Petrobras (PBR) is down 21.3% to $9.34 on news that its chief executive is resigning.

UDR (UDR) is up 1% to $36.83 after Stifel upgraded it to Buy. —Teresa Rivas

Corrections & Amplifications: This post originally appeared with an incorrect byline. It was written by Brett Arends, not Ben Levisohn.

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