Fed TAF at $75B, Stocks Gain

123jump.com Staff
02 May, 2008
New York City

U.S. stocks edged lower after surging nearly one percent at the opening. The Fed widened its term auction next week to $75 billion from $50 billion. April non-farm payroll declined lower than expected, sparking a rally in dollar. Construction and retail industries continue to shed workers. In addition, construction spending fell 1.1% in March. Crude oil and gold edged higher. Tech stocks fell after a surge at the opening.

[R]11:00AM New York – U.S. stocks lost most of the gains at the opening after ninety minute of trading.[/R]

U.S. stocks surged at the opening after the release of payroll data and the increase in the size of the Fed auction. The stocks lost the momentum as oil edged higher and fears of inflation resurfaced.

April payroll declines and construction in March fell

Non-farm payroll in April fell by 20,000 and unemployment in the month dropped to 5% from 5.1%. For the first quarter total job losses were 240,000.

In April, employment in construction declined by 61,000, with losses continuing throughout most of the sector. Since its peak in September 2006, construction employment has fallen by 457,000. March payroll declines were revised lower to 81,000 and February data was lowered to 83,000.

March construction spending declined 1.1% from February and fell 3.4% from March 2007.

Spending on private construction was at a seasonally adjusted annual rate of $827.4 billion, 1.7% below the revised February estimate of $842.0 billion. Residential construction was at a seasonally adjusted annual rate of $445.0 billion in March, 4.6% below the revised February estimate of $466.7 billion. Nonresidential construction was at a seasonally adjusted annual rate of $382.3 billion in March, 1.9% above the revised February estimate of $375.3 billion.

The Fed enlarges its TAF facility

The Fed is increasing its Term Auction Facility as credit market remains tight in New York and in international markets. The Fed at its next auction on May 5th will increase its auction size to $75 billion from $50 billion.

The U.S. dollar gained full one cent against euro in the currency markets after the increase in auction size.

Earnings review

Agrium Inc ((AGU)) rose after it reported first quarter earnings of $195 million or $1.23 per share compared to a loss of $11 million or 8 cents per share. For the second quarter the compay guided earnings per share between $1.92 and $2.22 per share.

Agrium stock ((AGU)) jumped $3.35 to $81.70.

Chevron reported first quarter net income increased to $5.17 billion from $4.7 billion a year ago or earnings per share increased to $2.47 from $2.18 million. Revenue in the quarter rose to $54.6 billion from $46.3 billion in the prior year in the same period.

Chevron stock ((CVX)) fell 11 cents to $94.83.

Dolby surged after it reported second quarter revenue of $172.6 million and earnings of $56.8 million compared to $129 million or earnings of $39 million. Earnings per share increased to 49 cents from 34 cents in the prior year.

Dolby guided fiscal 2008 revenue between $585 million and $615 million and earnings per share between $1.47 and $1.57.

Dolby ((DLB)) stock rose $4.36 to $46.11.