Employment Report Lifts U.S. Markets

123jump.com Staff
05 Oct, 2007
New York City

September employment report from the U.S. Labor Department reported an addition of 110,000 to payroll and revised August estimate from a loss of 4,000 to a gain of 89,000. The strength in the labor market, quickly lifted market mood at the opening and helped indexes in European trading. Retailer, home builders, and consumer cyclicals gained at mid-day trading. Research in Motion jumped 10% after reporting a eanings of 50 cents per share. Merrill Lynch to take $5 billion charge.

[R]1:00PM New York, 7:00PM Frankfurt – Employment report lifted stocks in the U.S. and market indexes in Europe.[/R]

Market indexes in New York trading were lifted at the opening after the employment report and continued to trade at the peak for the day. Dow Jones Industrial Average added 90 points to 14,066, Nasdaq jumped 35 to 2,769, and S&P 500 increased 12 to 1,555.

Nasdaq for the week has increased 2.6%, Dow after crossing a record high this week is up 1.3%, and S&P 500 is up 2% for the week. For the year Nasdaq is up 14.3%, Dow up 13%, and S&P 500 up 9.6%.

U.S. Labor Department released its September employment report and said that 110,000 workers were added to the payroll. August month data was revised from a decline of 4,000 to an increase of 89,000. The reversal for the August month and sharp increase in September month data lifted market indexes.

Employment report lifted stocks in the European trading as well and lowered the U.S. bonds, and dollar firmed against the euro.

Research in Motion ((RIMM)) reported fiscal 2008 second quarter earnings of 50 cents compared to 25 cents a year ago. The revenue for the company rose 10% on revised revenue and earnings guidance for the year. At mid-day the stock traded at $112.60.

Washington Mutual, ((WM)) one of the largest mortgage lender, said that the quarter earnings will be affected by a charge of $975 million to cover loan losses and are likely to drop 75%. The company will also take charges for $150 million related to $17 billion portfolio adjustment, $150 million in mortgage securities trading, $110 million losses in mortgage-backed securities that are for sale.

Merrill Lynch & Company ((MER)) said that it is likely to report loss in the recently finished quarter on the account of losses of $5 billion in mortgage related business. This comes after the Citigroup, Credit Suisse, UBS, and other have declared losses of $11 billion.

Pall Corp ((PLL)) jumped after reporting a preliminary earnings report. The company estimated fourth quarter sales increase of 8.2% to $646.3 million and earnings before interest and taxes increased 28.4% to $299 million.

Google Inc ((GOOG)) jumped $14 to $593.01 after Bear Stearns analyst projected higher ad spending and raised target price by the end of the next year to $700. Yahoo jumped 3% to $27.54 after analyst report from Sanford C. Bernstein speculated that the total value of different business at Yahoo is worth $39 per share.

[R]8:00AM New York – Barclays abandons its offer from ABN Amro.[/R]

Barclays Plc withdrew its offer of cash and stock worth $84 billion for ABN Amro after only 80% shareholders were tendered.

The bid led by Royal Bank of Scotland from the consortium of three banks is now likely to split the bank in three divisions. The higher bid valued at 70.5 billion euros or $99 billion is not what the management of ABN Amro had preferred.

Barclays said that it is likely to ask for the breakup fee of 200 million euros.

The consortium of three banks led by RBS included Banco Santander Central Hispano of Spain and Fortis of the Netherlands.

[R]6:00AM New York, 6:00PM Tokyo - Casio leads Tokyo down 0.2%. Nikkei 225 up 1.7% for the week. Japan’s foreign exchange reserves hits record US$945 billion[/R]

In Tokyo trading Nikkei 225 closed 0.16% or 27.45 or 17,065.04 in the red, while the broader Topix index firmed 1.6%. The index was up1.7% for the week.

Of the Nikkei 225 stocks 92 gained, 119 declined and 14 were unchanged. Softbank Corporation led advancers, rising 5.36% after the Telecommunications Carriers Association revealed the company has gained more subscribers for the fifth straight month than its biggest rivals NTT DoCoMo and KDDI. Energy and Financial stocks gained as well.

Oil prices rose for the first time in five days to $81.44 per barrel after an unexpected decline in U.S. stockpiles. Inpex Holdings gained 2.54%, Nippon Oil rose 0.85%.

Director of petroleum and gas division for the Agency of Natural Resources and Energy Shin Hosaka said today the Ministry of Economy, Trade and Industry will notify Japan’s oil companies of Angola’s tender for blocks scheduled for December. He added that Japan was finding it difficult to source oil from the African market in the wake of competition from China.

According to Hosaka METI is set to increase crude oil imports from companies fully and partially owned by Japanese to 40% by 2030 from the current 15%. Japan imports all its oil requirements and imports 4.25 million crude oil barrels a day in 2006. Of the imported oil 90% is sourced from the Middle East and Angola accounted for less than 1% of its imports.

Japan’s Ministry of Finance said today foreign exchange reserves rose for the fourth consecutive month to a record $945.6 billion in September. The September reserve is $13.44 billion more than the record amount of $932.16 billion reached in August.

Foreign securities stood at $794.04 billion as at September 30 compared to $785.6 billion a month earlier, while forex deposits increased from $125.27 billion in August to $125.50 billion in September.

Cabinet Office said today the leading index, a measure of outlook for economic growth, fell 30% from 50% in June and July as equities and housing starts slumped. The measure indicates that that the economy may slow in the next three to six months. The coincidence index, which gauges business conditions, was at 83.3%, its fifth month above 50%.

Japan’s housing starts slipped to a 40-year low by 43% in August after surging in the past two months as applications for building permits soared from companies that wanted to beat the new law implemented on June 20th dictating a longer approval process.

Of the index shares Softbank Corporation led gainers with a rise of 5.36%, followed by rises of 4.78% in Japan Tobacco, 4.14% in KDDI Corp, 4.08% in Yahoo Japan Corp and 3.89% in Olympus Corp.

Softbank Corporation beat two largest rivals NTT DoCoMo and KDDI by adding a net 198,300 subscribers through aggressive marketing of its ‘au’ and ‘tuka’ services. NTT DoCoMo added 37,500 and KDDI increased 158,000 new subscribers. NTT leads the market with a total of 53 million subscribers followed by KDDI with 29.5 million subscribers, and Softbank with 17.1 million subscribers of which 11 million subscribers are on third generation wireless plans. The three companies are involved in a price war with monthly service charges as low as 900 yen and phone tariff of less than 10 yen per minute.

Casio Computer led the decliners with a sharp loss of 19.1%, followed by losses of 4.63% in Advantest, of 3.64% in Clarion Company Limited, of 3.56% in IHI Corporation and 3.46% in NGK Insulators.

Casio Computer Company forecasted net profit of 17 billion yen for the year ending in March 2008 down 39% from the 28 billion yen forecasted four months ago. The company forecasted annual revenue of 610 billion yen nearly 7% lower than its earlier estimate and a 30% decline in operating income to 37 million yen.

The company’s entry into the crowded market for personal mobile devices is also expected incur significant development and marketing costs. The company blamed the decline on lower prices, higher development costs, and on a sharp reversal in prices for LCD panels.

The press release noted that the financial results for the second half of the year are expected to record net sales of ¥20 billion, with an operating income of ¥5 billion below the previous forecasts as a result of taking into account the decline in the domestic market share for cellular phones, as well as the falling unit prices for TFT LCDs. The full-year financial results are thus forecast to record net sales of 610 billion, with an operating income of ¥37 billion, ordinary income of ¥31 billion, and net income of ¥17 billion.