Friday, December 2, 2011

Markets rise on lower unemployment

Dow rose 61, advancers ahead of decliners almost 4-1 & NAZ was up 17.  Banks stocks led the charge with the Financial Index rising 4 to 175.

The MLP index rose 2 to the 375s & the REIT index gained 4 to 224.  Junk bond funds were up about 1% & Treasuries were flattish to higher.  Oil continues above $100, an important support level, while gold is heading for $1800 (again).

AMZ    Alerian MLP Index

DJR  Dow Jones Equity REIT Index

Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLF12.NYM...Crude Oil Jan 12...100.55 .....Up 0.35  (0.4%)

GCZ11.CMX...Gold Dec 11......1,749.60 ...Up 14.30  (0.8%)

Get the latest market update below:

Weekly Jobless Claims Down

Photo:   Bloomberg

The unemployment rate fell to a 2½ year low of 8.6% in Nov & companies stepped up hiring.  Nonfarm payrolls increased 120K according to the Labor Dept, in line with expectations for a gain of 122K.  The relative strength of the report was also bolstered by revisions to the employment counts for Sep & Oct to show 72K more jobs created than previously reported.  While part of the decline in the unemployment rate from 9% in Oct was due to people leaving the labor force, the household survey from which the jobless rate is derived also showed solid gains in employment.  However, retail accounted for more than a third all new private sector jobs (low payng) in Nov.  The report could temper the appetite among some Federal Reserve (FED) officials to ease monetary policy further. In forecasts released earlier this month, the FED said the jobless rate would likely average 9-9.1% in Q4 & did not expect it to drop to an 8.5-8.7% range until late next year.  Moderately good news, but job creation is critical & that gets only a so- so grade.

U.S. Jobless Rate Unexpectedly Declines to 8.6%

Western Digital jumped after it raised quarterly revenue forecast, citing its recovery from flooding in Thailand.  Revenue will be at least $1.8B in Q4.  After flooding in Thailand devastated factories & constrained supplies, WDC predicted sales of $1.05-$1.25B.  The company resumed hard-drive production inthis week, “well in advance of our earliest expectations when the floods hit,” CEO John Coyne said.  WDC & Seagate (STX) signaled this week that the industry is recovering from the disaster. The floodwaters engulfed much of the industrial heartland north of Bangkok, sidelining production of disk drives & components.  WDC was hit worse than STX (whose factories weren’t directly affected).  The stock was up 2.76 (9%).

WDC  Western Digital Corp.

Italian & Spanish bonds rose. The 2-year notes headed for a record week on optimism European fincial leaders will agree on measures to pave the way for crisis- fighting assistance from the ECB.  Italian bonds advanced for a 3rd day on indications that the ECB may channel bailout loans via the IMF.  Spanish debt climbed for a 5th session after French President Sarkosy said the euro area must converge economically & German Chancellor Merketl said the bloc needs a fiscal union.  Italys' 2-year yield fell 33 basis points to 5.99%.  The rate has dropped from 7.66% last week, the biggest weekly decline in 18 years (of course it started form an unusually high rate).  Spanish 2-year yields dropped 39 basis points to 4.39%, having tumbled 170 basis points this week.  But volatility on Spanish debt remains extremely high.  While this sounds good, for the time being it is just talk.

Italian, Spanish Notes Gain on Aid Optimism; Head for Record Weekly Gain

Stocks are having another good day which should wrap up the best week in more than 2 years.  The unemployment report was encouraging, but fundamental problems have not been solved.  The present rate is still far above the 8% upper limited which was talked about & the reason that the stimulus bill had to be passed in a rush.  Short term pressure on European debts has eased, but the affected countries will need a lot of help.  The US economy is OK, although that not great at this stage of a recovery.  An extension of reduced Social Security tax for wage earners was turned down.  If that ends in 4 weeks, wage earners were be receiving pay cuts in their first Jan pay checks.  Bulls are happy with an outlook of "Why worry?"

Dow Jones Industrial Average

Get your favorite symbols' Trend Analysis TODAY!  

No comments: