Here's why stocks are flat on good jobs report

A trader works on the floor of the New York Stock Exchange.
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Given the excellent jobs report, you might expect the market to have a bit more of an enthusiastic response. But it's not happening: the advance/decline has been even throughout the morning.

But two factors are constraining the rally:

1) an enormous, four day advance (the Dow has rallied more than 800 points since Monday's bottom), and

2) fears of higher rates.

The main issue is rates: fear of the Fed becoming more rigid about raising rates quicker rather than later.

Some interest rate sensitive sectors are down today—REITs and Utilities are down two percent. But home builders are up, as are high-yield corporate bonds.

Let's say it's not exactly a big trend, yet.

Where's the panic threshold? No one knows. Some are arguing that an aggressive move over 2.0 percent on the 10-year, currently at 1.93 percent, could be it. But the 10-year has spent so little time below 2.0 percent (other than a brief dip in October, it's really just since the beginning of the year) that it seems unlikely that will do it. 2.2 percent?

Financials are up today on those higher rates.

We should get an indication very quickly about how the Fed feels about the data. Janet Yellen will give her semi-annual monetary policy report to Congress will be February 24th and 25th.

Remember the FOMC statement: "...if incoming information indicates faster progress toward the Committee's employment and inflation objectives than the Committee now expects, then increases in the target range for the federal funds rate are likely to occur sooner than currently anticipated."

Will she give any nod to "faster progress?" If she does, that will be a market mover.

Meanwhile, it's another tough day for commodities. Gold, silver, platinum, palladium all down two to three percent, copper down 0.5 percent.

That dollar strength, coupled with deflation and adequate supply, is creating some strange moves in commodities. Natural gas at 3-year lows, with a spate of cold weather? Huh?