One important issue for investors is where to invest when big tech is under pressure. Over the past month we’ve seen some rotation into other niches of technology, most notably semiconductors. However, the chip names got crushed yesterday after cautionary comments from Micron Technology (MU) regarding DRAM and NAND pricing.

There was some buying in software names, and after the bell Palo Alto Network (PANW) and Finisar (FNSR) moved higher on earnings. These names can’t pick up all the slack, though.

Beyond the near-term struggles with market leadership, we are once again reminded of the underlying strength in the economy, with trucker Old Dominion Freight Line (ODFL) moving to a new all-time high.

While anxiety is increasing, major indices are still higher for the year, including the NASDAQ, which is nearing key support at 7,825. It has to make a stand here or it could be vulnerable to 7,500.

Another Strong Jobs Report

As we look ahead, this morning’s jobs report was critical as it could set the tone for the market and Federal Reserve through the remainder of the year. Here’s what we learned:

August created another 201,000 new jobs, which came in ahead of consensus at 190,000. The private sector gained 204,000 jobs while 3,000 were lost in the public sector. July was revised lower by 40,000 and June was lowered by 10,000. The unemployment rate was flat at 3.9%, and the labor participation rate fell to 62.7%, down 2.2% from July.

Here’s a breakdown of the jobs figure:

  • Construction: +23,000
  • Retail: -5,900
  • Manufacturing: -3,000
  • Service Providers: +178,000
  • Leisure/Hospitality: +17,000

Construction continues to trend higher – the 23,000 increase in August brings the total to 297,000 jobs added so far this year. The report highlighted that there was a bigger decline among women than men. There was also a big spike in college degree jobs and a smaller increase in less-than-college.

Wage growth was a bit hotter than anticipated, as hourly earnings increased $0.10 per hour to average earnings of $27.16. Year-over-year, wage growth is up 2.9.

The average hourly work week was 34.5 hours, while in the manufacturing industry it was 41 hours. Both figures were unchanged from July.

What does it all mean? Well, the market opened lower this morning on the strong wage growth as worry about Fed hikes reared its head yet again. The last time wage increases were 2.9% was in January, and when that report was released on February 6 the Dow fell 666 points. The drop in the labor participation rate will also likely draw the Fed’s attention.

As I write this a couple hours into trading, stocks have started to turn positive. I’m keeping an eye on the action, but we have to keep in mind that September is historically a more volatile month. Gyrations create opportunity, and you can be sure I’ve got my eyes peeled for more attractive entries in great American companies to own over the long term.