Thursday, January 3, 2013

Markets slide lower after employment reports

Dow pulled back 25, advancers just ahead of decliners & NAZ slid 2.  The Financial Index lost 1 to the 226s after yesterday's big gain.  The MLP index rose 1+ to the 401s & the REIT index was off a fraction to 271.  Junk bond funds were weak & Treasuries retreated.  Oil & gold also sold off.

AMJ (Alerian MLP Index tracking Fund)

stock chart

CLG13.NYM...Crude Oil Feb 13...93.10 ...Down 0.02  (0.0%)

GCF13.CMX...Gold Jan 13......1,678.00 ...Down 9.90  (0.6%)

Job seekers apply for the 300 available positions at a new Target retail store in San Francisco, California August 9, 2012. REUTERS/Robert Galbraith

Photo:   Yahoo

Private-sector employers added more new jobs than expected last month even as a potential budget crisis loomed, helping the job market end 2012 on a high note.  The ADP National Employment Report showed the private sector added 215K jobs in Dec, above the expectation of a 133K gain.  The increase came even as companies worried the economy might fall off a fiscal cliff at year end.  A revival in new construction jobs was also a hopeful sign, though the gains were likely boosted by rebuilding efforts after Superstorm Sandy hit the East Coast.  Nov payrolls tally was also revised upward to show a gain of 148K from the previously reported 118K.  The ADP data has had a mixed track record when it comes to predicting changes in the Bureau of Labor Statistics' more comprehensive payrolls data.  The Dec report, due tomorrow, is expected to show the economy added 150K jobs last month after adding 146K in Nov.

ADP Says Companies in U.S. Added 215,000 Workers in December

Jobless Claims in U.S. Rose More Than Forecast in Holidays

Photo:   Bloomberg

More sought unemployment benefits last week, though the winter holidays likely distorted the data for the 2nd straight week.  The Labor Dept said that weekly applications rose 10K to 372K after the previous week's total was revised higher.  Many state unemployment offices were closed this week for the New Year's holiday & did not submit complete data for last week.  As a result, estimates were used for 9 states.  In a typical week, estimates are made for only 1 or 2 states.  The broader trend has been favorable as the 4-week average was little changed at 360K, only slightly above the previous week's 359.8K, which was the lowest in more than 4 years.

Jobless Claims in U.S. Rose More Than Forecast in Holidays

Macy’s to Gap December Sales Top Estimates on Late Discounts

Photo:   Bloomberg

Macy's revenue in stores open at least one year rose 4.1% in Dec, edging past estimates.  But the figure grew less than the company expected during the vital 2-month Nov & Dec period, the key holiday shopping months, & Macy's lowered its Q4 guidance.  The chain also will close 6 underperforming stores.  Expectations were for the figure to rise 4%.  Total revenue for the 5 weeks ended Dec 29 rose nearly 4% to $5.1B from $4.9B last year.  CEO Terry Lundgren said the rate of growth of revenue in stores open at least one year was less than expected, but that was due partly to uncertain economic news & the lingering effect of Superstorm Sandy.  YTD revenue in stores open at least one year rose 3.3% & total revenue also rose 3.3% to $25.9B from $25.1B.  The company now expects revenue in stores open at least one year to rise 3-3½% in Q4, down from prior expectations of 4.2%.  Macy's expects EPS of $1.91-$1.96 for Q4, excluding costs related to a tender offer & store closings.  Previously it expected EPS of $1.94-$1.99 & analysts are forecasting $1.98.  After the closings, Macy's will operate 798 stores in 45 states.  Macy's said it plans to open 9 Macy's & Bloomingdale's in the US to replace the stores it is closing.  The stock slipped 28¢.

Macy's key revenue figure rises in December AP

Macy's (M)

stock chart

Markets are taking a breather after yesterday's big gains.  A sense of reality may be returning to traders.  All the confusion about going over the cliff caused business execs to be more cautious as were consumers.  Dec data may come in under forecasts & forecasts for GDP growth in 2013 are being lowered to drab levels.  When life settles down in DC after the new congress is sworn in, more attention will be paid to raising the debt ceiling which promises to be an ugly fight.  The US has already reached that level, but the Treasury can juggle this & that for a couple of months before hard choices have to be made about which bills will be paid from dwindling available funds.  The new year is beginning with plenty of economic problems & headwinds.

Dow Jones Industrials

stock chart

No comments: