Friday, February 3, 2012

Markets jumps higher on job report

Dow shot up 156 on favorable unemployment data (closing near the highs), advancers almost 4-1 ahead of decliners (could have been better) & NAZ gained 45.  Banks led the rally, taking the Financial Index to yet another high since late Jul.

S&P 500 Financials Sector Index

Value 198.36 One-Year Chart for S&P 500 Financials Sector Index GICS Level 1 (S5FINL:IND)
Change    5.17    (2.7%)

The federal gov wants to restrict oil shale development on public lands which would keep activity off thousands of acres of environmentally sensitive areas.  New leases initially would be issued strictly for research on how to commercially produce oil from oil shale in Utah, Wyoming & Colorado.  This damper has held back MLPs this week & accounts for today's decline in a rising market.  The REIT index rose 3 to its 12 month highs & junk bond funds edged higher.  Treasuries sank on the prospects of an expanding economy.  However the yield on the 10 year Treasury bond remains well under 2%, extremely low by historical standards.  Oil gained for the first time in 6 days, paring a weekly loss, after the jobless rate fell to the lowest level in 3 years.  Gold fell a very big $31, its first decline in 4 sessions on the positive US economic data.

Alerian MLP Index

Value 396.73 One-Year Chart for Alerian MLP Index (AMZ:IND)
Change    -1.24    (-0.3%)

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CLH12.NYM...Crude Oil Mar 12....97.56 ...Up 1.20  (1.3%)

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The jobless rate unexpectedly fell in Jan to the lowest in 3 years as payrolls climbed more than forecast, casting doubt on the plan by the Federal Reserve (FED) to keep interest rates low until late 2014.  The 8,3% unemployment rate was the lowest in 3 years.  The data, which showed gains from factories to retailers, comes a week after the FED said unemployment would be slow to decline. 

Greek unions & employers' associations just rejected private-sector wage cuts, as demanded by the country's bailout lenders to receive a new rescue package & avoid bankruptcy.  The impasse appeared to be holding up final negotiations for massive new debt agreements which had been expected for Mon was postponed to later in the week.  The unions & employers said they rejected proposals to slash the minimum wage & further cut annual salaries.  Wage costs have emerged as a major sticking point in negotiations.  The creditors argue that cutting labor costs is essential to making the Greek economy more competitive.  However, both the unions & employers associations counter that the move will only further depress consumer spending & therefore tax revenue.  The  debt mess drags on as talks are still going nowhere!

Greek bailout deal held up by labor reforms talks AP

Jump After Facebook IPO Filing

Photo:   Bloomberg

Zynga, the developer of games for social-networking sites, has climbed sharply in the past 2 trading days, boosted by Facebook's IPO filing.  The stock got a lift after Facebook reported that 12% of its revenue comes from ZNGA, which makes such games as “CityVille” & “Texas HoldEm Poker” for the site.  ZNGA is far more reliant on Facebook, it gets more than 90% of its revenue from Facebook.  Users buy Facebook Credits in ZNGA games, with Facebook keeping 30% of sales from the transactions.  Facebook made $188M from payments & other fees in Q4 of last year, 21% above Q3.  That growth could be a sign ZNGA will beat estimates for Q4 sales.   ZNGA rose $1.01 today & is up $2.79 in the last 2 days.

Zynga Shares Jump After Facebook IPO Filing

Zynga Inc. (ZNGA)

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It's difficult to believe that the market could have behaved even better, but this was not the magnificent rally it would have been in another time.  The US economic news was about as good as could be hoped for.  However, good economic news could put a damper on keeping interest rates low.  The European debt mess is not going away soon.  Earnings season is winding down & the results are on the mixed side, good enough to get by short of great.  Dow is playing offense & is shooting for 13K next week.  The success of a Facebook IPO will indicate if buyers are committed to higher markets.

Dow Industrials

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