Jobs Report Signals 'Paradigm Shift' in Equity Investing

NEW YORK (TheStreet) -- Party like it's 2007 because Friday's November jobs report reintroduced the once-proud concept that market action doesn't have to depend on the Federal Reserve. It can actually turn on the companies' fundamentals, their profits and losses, rates of growth.

The United States added 203,000 jobs in November as the unemployment rate dipped to a 5-year low of 7%. Adding elation to the better-than-expected data was an uptick in labor force participation and hourly wages. Analysts said the report marked a critical economic shift five years out from the 2008 financial crisis.

"The exciting part about this is that the market has shifted from strict taper talk to fundamentals," Mike Serio, regional chief investment officer for Wells Fargo Private Banks, said in a phone interview. "That is big; it's almost a paradigm shift."

September and October combined payroll revisions showed a gain of 8,000. On Thursday, revised third-quarter gross domestic product jumped to 3.6% and jobless claims came in much lower than expected. Private payrolls, reported by ADP on Wednesday, surged more than 30,000 above economists' forecast. On Monday, the November Institute for Supply Management's manufacturing index hit a two-and-a-half-year high.

A lot of positives. The raft of strong economic data has more optimistic analysts forecasting that the Fed will scale back its economic stimulus program during its upcoming policy-making meeting while more skeptical analysts caution that the central bank is poised to announce that it will begin a so-called tapering in the first quarter of 2014.

"I expect that they'll signal that they're going to be taking this punch bowl away," Mike McGlone, research director at ETF Securities U.S., said in a phone interview from New York. McGlone said if central bankers don't even show that initiative "the market will take that as an irresponsible Fed."

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