Strong jobs market should be good news for investors

— -- A strong July jobs market is a good thing for stock investors, even if Mr. Market reacts petulantly at first.

The U.S. added 163,000 jobs in July, according to the Commerce Department, the best showing for the job market in five months. Wall Street expected about 100,000 new jobs.

More jobs means more consumer spending, and two-thirds of the economy depends on consumers opening their wallets. You don't spend when you think your boss has you on standby for the first flight to Palookaville.

More consumer spending spells better earnings for consumer stocks, as well as leisure and hospitality stocks — think hotels and cruises — as well.

In the short term, the stronger-than-expected report could be a slight negative for the stock market, because it reduces the chance that the Federal Reserve will start another round of quantitative easing to stimulate the economy. If the economy grows on its own, it might not need another booster shot from the Fed.

"It's like your mom telling you that if you don't gain weight, she'll start feeding you Twinkies," says Sam Stovall, chief market strategist for S&P Capital IQ. You might be more excited about the Twinkies than the benefits of gaining weight.

But the jobs report wasn't so strong as to preclude any Fed action. After all, the overall unemployment rate rose to 8.3% in July from a revised 8.2%. And, says Stovall, "A rational investor would prefer a growing economy over additional stimulus."

The jobs report wasn't strong enough to sell your bond funds. Bond prices rise — and yields fall — when the economy looks week. But it's a warning sign that now is not the time to load up on bond funds, no matter how well they have done in the past few years.