Wall Street Tanks, but July a Better Month for Hiring than June

The July jobs reports had some relatively good news on the heels of Wall Street's worst day in three years; commodities drop along with stocks; and CRE prices remain steady.

By Dees Stribling, Contributing Editor

The statistic everyone has been waiting for this week came down from the Bureau of Labor Statistics on Friday morning: during July, the U.S. created 117,000 jobs. That’s a middling performance, but still much better than June’s exceedingly meager showing. The question now is whether this (relatively) good bit of news is going to calm nerves among investors of all stripes.

The jobs numbers weren’t even out on on Thursday when Wall Street apparently decided to go ahead and panic on the notion that some of the larger E.U. economies–Spain, Italy–are ready to emulate the Greeks and their debt situation, but with much worse consequences. Or so the analysts’ thinking went. It wasn’t really clear what the trigger was beyond a generalized sense of gloom, which is sometimes all it takes to get investors moving in a herd-like motion to sell.

That is what happened on Thursday, erasing all of the equity markets’ gains for 2011. The Dow Jones Industrial Average lost 512.76 points, or 4.31 percent, while the S&P 500 was down 4.78 percent and the Nasdaq took a drubbing to the tune of 5.08 percent. It was the worst day on the Street since the darkest days of late 2008.

Commodities also drop on widespread nervousness

Stocks weren’t the only thing pushing into negative territory on Thursday. Commodities took some deep dives as well, with benchmark crude oil in particular taking a beating, dropping $5.30 to a six-month low. Other energy futures declined as well, including the silver-lining news that gasoline prices will fall for U.S. consumers as a result.

Even gold and other precious metals, recently at record highs (in nominal terms), saw investors headed for the door and prices headed for the floor. The yellow metal so beloved by survivalists, gold bugs and Ron Paul dropped a relatively small $7.30 to settle at $1,659 per troy ounce. Silver dropped $2.32, or 5.6 percent, to $39.43 per troy ounce.

And where are investors putting their money, now that risk seems to be too risky? U.S. government debt, the kind of debt no one was absolutely sure would be honored until a few days ago? In response to investor demand, the yield on two-year Treasury Notes hit a record low on Thursday.

CRE valuations flat in July

Perhaps unsurprisingly, commercial real estate prices didn’t rise in July, according to the latest Green Street Advisors Commercial Property Price Index–but at least the index didn’t record a drop. Prices are back to where they were in late ’06, according to the real estate research and consulting firm. That means that properties have increased in value by more than 45 percent from the 2009 trough, which means that three-quarters of the decline that occurred from 2007 to 2009 has been erased.

“Property prices appear to have taken a breather on the heels of a robust two-year rally,” notes Mike Kirby, Green Street’s director of research, in a statement. “Capital availability has improved markedly over that period, and the cost of that capital has fallen as well. The combination of improved access to capital, return hurdles that are again near all-time lows, and strengthening property fundamentals has caused buyers to become much more aggressive. This has benefitted high-quality properties in particular, but prices of lower-quality properties have also been recovering.”