Washington Post: Jump in Unemployment Does Little Damage on Wall St.
Though the stock market’s advance over the past three and a half months has been based on expectations that the economy will soon pick up steam, the disappointing jobs report did relatively little damage.

Bloomberg: US stocks fall because of June employment report
US stocks declined after a government report showed the unemployment rate rose more than forecast in June, suggesting that any economic recovery may falter as consumers become more reluctant to spend.

"Employment tends to be a lagging indicator," said Vladimir de Vassal, head of quantitative research at Glenmede Trust Co, which manages US$12 billion in Philadelphia. The service-industry report "provides greater assurance that the economy will be improving in the second half of 2003 and into next year," he said, and that means stocks will rise in the next year.

I'll be, I read that exact line in mid 2001 when CSCO etc al were sheading 20% of their work force. Well, maybe not in those exact words.

Economic data earlier in the week, including personal spending and consumption figures, as well as the National Association of Purchasing Management's separate surveys of manufacturing and service industries, had indicated hints of recovery. But Friday's jobs data, in conjunction with the profit warnings, reminded investors of the still-challenging economic environment.

You guessed it! That was from two years ago today!!

What a Week: Warnings, Troubling Jobs Data a Poisonous Cocktail

Skrainka said the worrisome aspect of the June employment report was not so much that manufacturing jobs were lost for the 11th consecutive month because that was not a surprise; more troubling was that the service sector failed to add new jobs in the second quarter for the first time in four decades, he said. "That tells us weakness so concentrated in manufacturing is now spreading."

The strategist expects the economy to bottom in the fourth quarter and declared himself to be "long-term bullish" on the market. But right now, "the fundamentals are just not very good," he said. "Caution is in order," particularly in technology and telecommunications stocks because there's "way too much supply in all key areas relative to demand."

How many times do we read this??? Spinning and spinning it goes...

Jobless recovery a hurdle for stocks
Big numbers all -- just as the U.S. unemployment number for June released this morning at 8:30 Eastern time is likely to be the biggest in nine years, rising, according to the consensus estimate, to 6.2% from 6.1% in May and extending the "jobless recovery.'

Meantime, the faster the economy can add jobs, the faster the recovery can validate the gains made in the stock market, which generally discounts economic growth and the accompanying earnings gains six to nine months down the road.

The consensus outlook of the economists surveyed by Bloomberg News is that companies are likely to keep payrolls lean till the economy accelerates. But is that putting the cart before the horse?

It seems to us that the economy might have trouble accelerating when the unemployment rate is at its highest level since July, 1994. The jobless rate is not particularly high by historical standards, with a U.S. rate of about 6% once considered near to full employment. But people without jobs don't spend much money and companies won't be persuaded to spend money unless the consumer demand is there to justify capital expenditures and, indeed, new hirings.

Economists reckon the economy grew at an annual pace of 2% in the second quarter after expanding at a tepid 1.6% in the first. As a result, to meet expectations of 3.2% growth this quarter and 3.5% in the fourth, output will almost have to double in the second half from the first half.