Market Euphoria About Jobs Report Has Already Ebbed

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NEW YORK ( TheStreet) -- Investor euphoria for February's employment report already may have ebbed.

Stock futures popped and the market spiked Friday morning at the opening bell after nonfarm payrolls for February surged 236,000, up from the prior month's revised 119,000 jobs. Economists were looking for just 160,000.

Less than an hour into the trading session, the S&P 500 and the Nasdaq drifted below the flatline and the Dow Jones Industrial Average challenged its lowest levels of the day.

A robust payrolls number like the one printed Friday morning would typically encourage sizeable gains in equity markets, boosted by the promise of an improving labor market and economy amidst four years of sluggish growth. But Friday saw modest growth of less than 0.5% on the three major indices .

"Once we saw equities start to digest the jobs number a little bit more, that's when we started to see equities come off their highs and when the bottom was put in on the metals," said Phil Streible, senior commodities broker at RJO Futures . "I think that people are really not buying that number as much -- 236,000 -- and they're really thinking that there will be big revisions down when we come up with this next nonfarm payroll."

Streible was speaking about the precious metals, specifically gold, which had sold off more than $10 an ounce at the Comex division of the New York Mercantile Exchange, but surged back into green territory to settle with slight gains by the afternoon.

Gold investors have closely tracked the monthly unemployment rate since the Federal Reserve said it would peg a policy of low interest rates to the unemployment number until it dropped to at least about 6.5% (or if inflation hit 2.5%).

Despite the upbeat labor report, unemployment still remains more than one percentage point above the Fed's target, and well above pre-recession levels.

"The problem is, we're still a long way from full employment, and at this pace it's going to take many years to get down to a reasonable unemployment rate," Gary Burtless, a labor economist at Brookings Institution, said in an interview .

Economists have called this an uncommon recovery as U.S. gross domestic product, the housing sector, the labor market and other indicators have grown at their slowest pace in any post-recession recovery since World War II.

The Bureau of Labor Statistics often revises the initial releases of the monthly employment situation in subsequent reports. For example, January's number dropped to 119,000 after an original posting of 157,000 new payrolls. The revisions can often work in a positive direction, like when January's report revised November 2012 payrolls to 247,000 after they had initially been reported at just 146,000.

Taking the report at face value, it's important to note that 236,000 new jobs likely was the most welcome surprise since the spring of last year, when economists credited a warmer-than-expected winter for a surge in added nonfarm payrolls and a steady tick down in the unemployment rate.