Futures Rise on Low Unemployment

Elena
03 Nov, 2006
New York City

U.S. stock market futures recovered from earlier uncertainty to turn higher Friday, boosted by stronger-than-expected jobs data which showed that unemployment rate dropped to a five-year low of 4.4% in October as employers added 92,000 new jobs. Whole Foods tumbled 20% in pre-open trading after warning that next-year revenue growth will come far below this-year levels.

[R]9:00AM Stock futures pushed up on strong jobs data[/R]
U.S. stock market futures recovered from earlier uncertainty to turn higher Friday, boosted by stronger-than-expected payrolls data which showed that the labor market was on firmer footing than expected. The Labor Department reported that Although U.S. nonfarm payrolls grew by a lower-than-expected 92,000 in October, while unemployment rate fell to a five-year low of 4.4%. Economists had been expecting payroll growth of about 123,000, while the jobless rate was expected to remain at 4.6%.

In earnings news, wireless technologies giant Qualcomm Inc. ((QCOM)) reported Q4 earnings and revenue that rose above year-earlier levels. For Q1, the company projected revenue of $1.98 billion to $2.08 billion, vs. the average estimate of $2.07 billion. Whole Foods ((WFMI)) tumbled 20% in pre-open trading after warning that next-year revenue growth will come in between 6% and 8%, down from 11% this year. Shares of Red Robin Gourmet Burgers ((RRGB)) plunged 26% after it cut its full-year earnings and revenue outlook. Red Hat ((RHAT)) shares dropped 2.1% on continuous pressure from the Microsoft-Novell partnership announced late Thursday. On the deal news front, Oracle ((ORCL)) announced it agreed to buy Stellent ((STEL)) for $440 million, or $13.50 a share, a 27% premium to its closing price. Stellent shares soared 26% in pre-open trading. S&P 500 futures rose 3.00 points at 1,374.30 and Nasdaq 100 futures were up 4.00 points at 1,720.50. Dow industrial futures advanced 24 points at 12,060.

[R]Non-farm payrolls data rose by 92,000 in October.[/R]
Friday morning, the Department of Labor released its report on the employment situation in the month of October, showing that the U.S. economy added fewer than expected jobs. At the same time, there was a significant upward revision to September employment growth. The report showed that non-farm payrolls rose by 92,000 in October following an upwardly revised increase of 148,000 jobs in September. Economists had expected an increase of 125,000 jobs compared to the increase of 51,000 jobs originally reported for the previous month. The Labor Department said that the October job growth reflected continued growth in several service-providing industries, although it noted that employment declined in the manufacturing and construction sectors. The report showed that service producing industries added 152,000 jobs in October, reflecting notable growth in professional and business service jobs. The education and health services, leisure and hospitality, and government sectors also added jobs, while retailers lost 3,000 jobs.

The increase in service producing jobs was partly offset by a decrease of 6,000 jobs in goods-producing industries. The manufacturing sector lost 39,000 jobs while the construction sector lost 26,000 jobs. The Labor Department added that the unemployment rate unexpectedly fell to a five-year low of 4.4 percent in October from 4.6 percent in September. Economists had been expecting the unemployment rate to come in unchanged. The report also showed that average hourly earnings rose 0.4 percent in October to $16.91, while average weekly earnings rose 0.7 percent to $573.25. On an annual basis, average hourly earnings were up 3.9 percent and average weekly earnings were up 4.2 percent.


[R]8:00AMMicrosoft’s Windows and Novell’s Linux to work together.[/R]
Microsoft Corp. ((MSFT)) announced late Thursday that it’s willing to partner with Novell Inc. ((NOVL)), its rival in the market for computer operating system software, to support Novell''s version of Linux.
The companies want to develop technology for computer systems in which Linux and Microsoft''s Windows work together. Microsoft and Novell also agreed not to sue customers who use both operating systems, removing the legal uncertainty over mixing Linux and Windows. Financial terms of the arrangement were not disclosed.

The alliance aims mainly at the growing number of major companies and government agencies that rely on elements of Redmond, Microsoft''s Windows and Linux to operate their computers. Under the partnership, Microsoft''s team will offer its corporate customers a chance to license its Windows operating system as part of a package offering maintenance and support for Novell''s Suse Linux platform. The partnership will relieve concerns of corporate users, reluctant to use Linux because of fears that Microsoft might retaliate with patent-infringement claims.

Following the news, Novell''s shares jumped 15.7%, to close Thursday at $6.79 on the Nasdaq Stock Market, while Microsoft''s shares dipped 4 cents to finish at $28.77.


[R]7:30AM Asian markets end mostly higher, Australia leads the way.[/R]
Asian markets closed mostly higher on Friday. Japanese market was closed for public holiday. Australia S&P/ASX 200 gained 0.4% to end at 5,432.00, topping a record set in the previous session on strong results from the biggest lender of the nation, National Australia Bank.

The Hang Seng Index in Hong Kong set an intraday record peak of 18,771.01, before settling back to end up 34.01 points, or 0.2%, at 18,749.69, with gains connected with advances in property shares and wireless giant China Mobile. Other indexes around the region also gained. The Kospi in South Korea bounced back from earlier losses to end marginally 0.01% higher.

Taiwan Weighted Price Index advanced 1.2% and Malaysia KLSE Composite Index was up 0.1%. Singapore Straits Times Index traded nearly flat. Indonesia JSX Composite Index reached 1,617.00, before easing slightly to end 0.2% higher at 1,611.50, a record close.


[R]6:30AM European stocks gain modestly in early Friday trading on banks.[/R]
European markets were slightly higher by mid morning on Friday. The FTSE 100 in London was flat at 6,147.4, Frankfurt Xetra Dax added 0.2% to 6,232.71 and the CAC 40 in Paris edged fractionally higher to 5,311.98.

Advancers

Commerzbank led the advancers after it topped forecasts with third-quarter net profit and announced it was on track to deliver one of the best full-year results in its history. Commerzbank shares gained 3.7%.

Allianz gained 1%. The insurance giant said that its third-quarter net income rose 100.4% to 1.6 billion euros ($2 billion) after a gain of 300 million euros from selling one of its units.

Swiss recruitment group Adecco moved 3.4% higher after beating expectations with a 38% rise in third-quarter net profit as its recent merger with Germany DIS paid off and it focused on professional staffing.

Saipem, the Italian oilfield services group, rose 2.9% after Merrill Lynch raised its rating to buy and its price target. Merrill said the recent lackluster performance of Saipem reflected concerns about its Snamprogetti engineering division.

Decliners

British Airways lost 1.5% after it its second-quarter pretax profit dropped 27% to 176 million pounds, while sales rose 4.9% to 2.3 billion pounds.

Packaging company and can maker Rexam declined 4.2% after it said that, although the majority of its plastic packaging operation continues to trade matching expectations, customer product launches in make-up have not materialized.

Oil and gold

Crude oil for December delivery rose 2 cents to $57.90 a barrel in Asian electronic trading on the New York Mercantile Exchange. December Brent crude on London''s ICE Futures Exchange gained 6 cents to $57.93 a barrel.

Gold opened Friday at a bid price of $622.80 a troy ounce, up from $621.00 late Thursday.

Currencies

The euro was little changed against the U.S. dollar on Friday ahead of new jobs data from the US economy. The euro bought $1.2773 in morning European trading, only just below its level of $1.2779 in New York late Thursday. The British pound stood at $1.9086, compared with $1.9088 on Thursday. The dollar slipped to 117.04 Japanese yen from 117.12 yen.