MARKET WRAP – STOCKS TANK IN FINAL 30 MINUTES OF TRADING
The strong session in Asia did little to boost U.S. stocks. The S&P 500 finished the day down 0.85%. Investors were quick to pare risk before the jobs number, which could come in worse than expected. Daily Futures has the action from all markets:
U.S. Economy
The U.S. Labor Department said that jobless claims were down 5,000 last week at 457,000, less than expected and the lowest in nearly 15 months. The March 2011 eurodollars ended down .02 at 98.47.
The Institute of Supply Management’s index of services fell from 50.6 to 48.7 in November, weaker than expected and a sign of contraction.
The Labor Department also said that non-farm productivity was up 4.0% in the third quarter from a year ago while unit labor costs were down 1.4%.
Freddie Mac said that the rate on 30-year fixed mortgages fell from 4.78% to 4.71% last week, a new record low.
According to CNBC, Bank of America will soon repay the $45 billion of TARP funds that it received from the U.S. government last year.
The U.S. Treasury said that next week, it will auction $40 billion of 3-year T-notes, $21 billion of 10-year T-notes, and $13 billion of 30-year T-bonds.
Grains and Cotton
Statistics Canada estimated that wheat production will total 26.5 million tons this year, up from their estimate of 24.6 million tons two months ago. March wheat was down 4.5 cents at $5.715.
The USDA said that, as of last week, 2009-2010 exports of:
Corn slipped from up 6% to up 5% from a year ago.
Soybeans fell from up 37% to up 33% from a year ago.
Wheat improved from down 32% to down 31% from a year ago.
Cotton slipped from down 35% to down 36% from a year ago.
January soybeans finished up 13 cents at $10.47.
Livestock
The USDA said that net sales of beef totaled 7,500 tons last week, down from 8,300 tons the previous week. February cattle plunged 1.37 to a new contract low at 82.90.
February hogs were higher early, helped that pork demand continues to look surprisingly good, but then closed down 1.35 at 65.30.
Cocoa
The International Cocoa Organization increased its world ending stocks estimate for 2008-2009 from 1.490 to 1.556 million tons, or 44% of annual use. March cocoa closed up $61 at $3,388, the highest close in five weeks.
Energies
The U.S. Department of Energy said that natural gas supplies were up 2 billion cubic feet last week at 3.837 trillion cubic feet. Supplies are now up 14% from a year ago. January natural gas closed down 7.1 cents at a new contract low of $4.459.
Currencies
The European Central Bank met and kept its interest rate unchanged at 1.0%, as expected. Bank President Trichet said that they will be ending some emergency funding measures this month. Also, a composite index of manufacturing and services in the Euro area from Markit Economics increased from 53.0 to 53.7 in November, the highest in two years.
Eurostat said that real GDP in the EU-27 was up .3% in the third quarter, but down 4.3% from a year ago. Also, retail sales in the EU-27 were up .3% in October, but down .9% from a year ago. The March euro closed up .0055 at $1.5084.
Australia’s Bureau of Statistics said that retail sales were up .3% in October, as expected.
According to the Financial Times, four British banks hold a total of $5 billion worth of debt in Dubai World. Also, an index of services in the U.K. slipped from 56.9 to 56.6 in November, still a sign of expansion.
Isn’t worse than expected still a reason for stocks to soar? i.e. Easy money forever and ever. Or do we now have a new paradigm?
Tomorrow:
Unemployment 10.4%, stocks down 1% on the open but then closing up 1%. Buy the dip.
OR
Unemployment 10.0%, stocks up 1% on the open but then closing down 1%. Sell the rally.
OR
Umemployment 10.2%, stocks open flat, up 1% mid-morning, down 1% early afternoon, close flat.
I’ll go with UE 10.4%, jobs -130K, market falls 70 on the news, but climbs back all day to finish even.
Hi TPC,
I have finally admitted to myself that I have no idea what will happen or how the market will react, but I do seem to be getting a somewhat better feel for how the market will react (immediately) when it does happen. I had
Looks like the 10.0% unemployment rate and stocks up 1% in the morning and falling during the day (maybe an even finish is more realistic than my 1% down, maybe even flat to where the market was before the decline in the last 30 minutes yesterday) seems to have been a decent interpretation of the market’s reaction (at least for part of one day).
Having written this I have probably jinxed myself into being completely wrong.
Up 1% in the morning to 1118 from where it spent most of the day yesterday 1108, falling 1% mid-day 998 and finishing in the middle 1,106 but pretty close to even.
I wish I could trade my lucky guesses more effectively. First I decided the only strategy in this environment is trading. Then I decide that I would go back to an investing strategy. Now I have come to the conclusion that it help to do both.