MARKET WRAP – STOCKS GET CRUSHED

Stocks got rocked on Friday after worrisome commentary out of Hungary and a job’s report that missed expectations by a wide margin.  The Euro concerns are clearly spreading and the U.S. private sector appears far weaker than it should be at this point in a “recovery”.  Markets resumed their deflationary trends as U.S. bonds and dollars soared and commodities and equities moved lower.  Volume was very heavy on the day and breadth was negative at 8:1.   U.S. stocks lost 2.2%  on the week. It’s becoming increasingly difficult to see any positive trends unfolding over the next few months as housing woes mount, the U.S. economy flounders and the Euro problems appear far from contained….

From Daily Futures:

U.S. Economy – Disappointing Job Growth
The U.S. Labor Department said that the unemployment rate improved from 9.9% to 9.7% in May with a gain of 430,000 jobs. Even though that sounds good, 411,000 of the jobs were due to the hiring of census workers so the numbers were actually disappointing. The September U.S. T-bonds jumped up 2.13/32nds to 124.29/32nds.

Non-farm payrolls for April still showed a gain of 290,000 jobs, the same as estimated last month. For March, non-farm payrolls were revised lower, from +230,000 to +208,000. The June U.S. dollar jumped up 1.101 cents to a new contract high of 88.315. Most commodity prices sank lower.

The June 2011 eurodollars closed up .10 at 98.76 as today’s weak employment figures made it less likely that the Fed will be in any hurry to raise the federal funds rate.

Grains and Cotton
The USDA said that, compared to the four-week average, last week’s net sales of:
Corn were down 84%.
Soybeans were down 55%.
Cotton were down 10%.

December corn fell 10.75 cents to $3.595, the lowest close in nearly nine months, pressured by favorable growing conditions in the U.S. and a rising U.S. dollar. November soybeans closed down 19.75 cents at $9.00, the lowest close in nearly eight months.

The USDA said that wheat actually had a net sales reduction of 53,200 tons last week. July wheat closed down 6 cents at a new contract low of $4.357.

December cotton finished down 1.12 at 75.28, the fifth consecutive day lower, hurt by expectations for a larger U.S. crop this year, a rising U.S. dollar, and concerns about world demand.

Livestock
The USDA said that net sales of beef totaled 7,900 tons last week, down 47% from the four-week average. August cattle finished down 1.50 at 88.62, the lowest close in 14 weeks.

After the close, the USDA estimated this holiday week’s beef production at 469.6 million pounds, down 8.5% from a year ago. Pork production was estimated at 365.1 million pounds, down 14.0% from a year ago. August hogs closed down 2.15 at 80.77, the lowest close in nine weeks.

Sugar
July sugar closed up .53 at 14.52, one of the few commodities that survived the day.

Energies
July crude oil fell $3.10 to $71.51, disappointed by today’s weak jobs report and ongoing problems in Europe.

Metals
The World Bank predicted that China’s GDP will continue to grow between 9-10% in 2010, but its not enough to help copper prices today. July copper dropped 12.70 cents to $2.8195, the lowest close in over seven months.

These markets are producing a liquidity crunch. August gold was lower this morning, but closed up $7.70 at $1,217.70.

Currencies
Statistics Canada said that the unemployment rate stayed at 8.1% in May with a net gain of 24,700 jobs, better than expected and the fifth consecutive gain. Also, building permits were up 5.4% in April to C$6.7 billion. The June Canadian dollar dropped 1.65 cents to 94.35 in spite of the good news.

Eurostat said that real GDP in the EU-27 was up .2% in the first quarter and up .5% from a year ago. Today’s figures were slightly better than the ones reported last month. The June euro continued to slide, finishing down 2.12 cents at $1.1966.

Japan’s Democratic Party picked Naoto Kan as their new Prime Minister, as expected. One of his goals will be to reduce Japan’s huge public debt, now near 200% of GDP. The June Japanese yen closed up .0148 at 1.0938.