Trader Talk

Jobs report brings back Goldilocks to Wall Street

Scott Mlyn | CNBC

September's Jobs report brings back Goldilocks scenario: goods news is good news for stocks.

How far has the market come? A year ago, if we would have had a jobs report like this, with strong upward revisions in the prior two months, the stock market might have gone DOWN, and Treasury yields ROCKETED upward, on fear that the Fed may begin raising rates soon.

What happened today? Stocks have been RISING all day, and 10-year yields are up a modest 1 percent or so, though the shorter end is up more.

Read MoreThe jobs market is growing. Is this what it sounds like when (Fed) doves stop crying?

What do we have? We have an improving economy, growth in jobs, and low inflation.

That's Goldilocks, and that's why stocks are strong.

Two good examples of sectors reacting to an improving economy: transports and retail.

The Dow Transports are having a huge day, up almost two percent. Right across the board, every sub-sector is up: railroads, airlines, shippers, logistics and truckers.

Besides the jobs report, the only other thing that has changed is prices. From the September intraday high to yesterday's low, the S&P was down almost 5 percent.

That created a new dynamic--bargain hunting, particularly in beaten-up sectors like retail.

The SPDR S&P Retail ETF (XRT), a basket of retail stocks, is up 1.6 percent after getting beaten up badly last month.

The most likely explanation is that this is short covering on the September job growth numbers, since traders have been very negative on the group. There may be some expectation that wages will likely rise sometime in the future, which would be positive for the retailers.

Most retailers are up at least 3 percent. Up more than 5 percent: JC Penney (JCP), Land's End (LE), Martha Stewart (MSO), Pacific Sunwear (PSUN) and Wet Seal (WTSL).

And, if we ever get oil prices to stabilize, the energy complex will see a jump as well. The Energy Select ETF (XLE), a basket of energy stocks, is down more than 10 percent in the last month.