Markets Advance on Jobs Report

123jump.com Staff
10 Mar, 2001
New York City

It was a day when investors around the world bought stocks. Markets in North and South America advanced led by solid jobs report in the U.S. European markets rose on the merger rumors in the banking sectors. Several banks in France, Germany and Switzerland rose at least 2%. Financial stocks in New York rose as American Express, AIG and Citigroup rose more than 1%. Emerging markets in Asia advanced. India closed record high on strength in banking stocks. Russia lost 9% for the week.

4:30PM U.S. advance on Jobs data, Europe on M&A talk and emerging markets recovered in Asia and Latin America.

S&P - 1281.58 up 9.35
DOW -11,076.34 up 104.06
NASDAQ - 2262.04 up 12.33


- Jobs data sparked a rally in the stock averages but bond yields rise.
- Yield on 10-year bond rose to 4.75%, financial stocks rise in the U.S.
- European markets closed up led by Switzerland, German and France.
- Russia closed 9% lower for the week but India, Brazil and Mexico recover.
- Oil and gold dropped on profit taking.


Broader averages and tech stocks rose on solid job report and fall in unemployment rate and on oil price below $60. The stable rise in employment sparked hopes that economy will grow and inflation will be under check. Stocks in the financial, home building and specialty retail advanced on the job report. AIG, Citigroup and American Express gained more than 1% and supported the rally in Dow stocks. Oil and other varieties of crude dropped ahead of the weekend as most traders selected to take profit on no news. Bond market looked at the same job report and came to a different conclusion. The yield on 10-year bond rose to 4.75%, rising eight ticks on the worries that hourly wages were up highest when measured annual rise in wages. Despite fall in most metal prices the sector jumped higher. Nucor raised earnings guidance and jumped up 5% at close. Similar rise in averages were experienced in European stocks.

Banking stocks rose in Europe on takeover rumors as reported in a French newspaper. Banks in France, Germany and Italy rose on speculation. Societe Generale rose 4.8% and Capitalia added 2.4% on speculation that they could be gobbled up in recent merger sweep. Deutsche Bank, Credit Suisse and Barclays added more than 2%. Seven of the eight markets in Europe advanced led by Switzerland, Germany and France with gains of 1.4%, 1.27% and 1.23%. Norway declined 0.29% as oil price declined in Europe.

In Asian emerging markets India and South Korea led advancers. Mumbai rose 1.81% and Korea advanced 0.68%. India’s SENSEX advanced to the all-time high of 10,765 led by software exporters. Infosys rose 2.5%, Satyam Computer jumped 3.7% and Tata Consultancy advanced 2.5%. Banking and tech stocks had not participated in the recent rally in Mumbai but managed to lead the session. ICICI Bank, India’s largest private bank, climbed up 1.8%, State Bank of India rose 1.6% and HDFC Bank rose 3.4%. Bajaj Auto and Tata Motors rose 3.2% and 2.4% respectively.

Emerging markets in Latin America advanced after five days of weak trading. Brazil added 1.5% and Mexico gained 0.6%. Brazil’s central bank lowered interest rate by 0.75% on Wednesday, one of the highest rates in the world, however since September 2005 the bank has cut the rate six times. Decline of 1.3% in industrial production in January did not affect the market’s advance during the session. Russia’s main index dropped another 0.74% and for the week declined more than 9%. Russian stocks in the metals and mining and energy sector took the biggest hit for the week.

Energy prices headed lower as volatility in the crude oil prices continued. Crude oil closed lower 51 cents to $59.96, gasoline and heating oil closed lower 3 cents to $1.688 and $1.684 per gallon respectively. Natural gas closed 4 cents higher to $6.64 mBTU. In metals market, gold and silver traded lower but copper closed higher. Gold dropped $5.70 per ounce to $541.30 and silver closed down 1 cent to $9.96 per ounce but copper closed up 1.45 cent to $2.21 per pound.


2:30PM Retailers report higher earnings but stocks sell-off.
Athletic apparel retailer Quiksilver Inc. reported earnings of 15 cents vs. 12 cents a year ago but reduced its outlook for the second-quarter to 6 cents from 17 cents of previous forecast. The stock lost 5%. Univision Communications Inc. shares rose 4% as reports emerged that a consortium formed of Mexican Grupo Televisa and Venezuela’s Venevision along with private equity firms are likely to bid for the company. Big Five Sporting Goods lost 6% on the Q4 earnings report of 39cents vs. 42 cents a year ago. Total sales for the quarter were $218.9 million and same-store sales grew 1.5%. Software developer Skillsoft traded down 8% on lower revenue of 3% and profit of 6 cents vs. loss of 27 cents a year ago. Universal Display Corp ((PANL)) lost 10% on wider loss of 17 cents vs. 11 cents a year ago.

12:30PM European markets gained ground.
European stocks dropped at mid-day dealings but later recovered to close sharply higher, boosted by stronger-than-expected U.S. non-farm payrolls data and continuous banking sector takeover speculations, including Societe Generale, up 4.8% and Deutsche Bank, up 3.4%. The German DAX 30 surged 1.3%, the French CAC 40 climbed 1.2%, and London FTSE 100 rose 0.9%.

Crude oil prices hovered round $60 on worries that further militant attacks will disrupt Nigeria’s oil production. Light sweet crude April delivery gained fell 25 cents to $60.67 a barrel. Gasoline lost 1 cent to $1.7175. Heating oil was also down a cent to $1.7065. Natural gas rose marginally to $6.605. London Brent rose 24 cents to $61.30. European gold lost ground. In London gold fell to $540.80 bid per troy ounce, down from $547.30. In Zurich the precious metal traded at $539.30, down from $546.10. In Hong Kong gold dropped 70 cents to $546.10. Silver closed at $9.92 per troy ounce, up from $9.90. The U.S. dollar advanced against other major currencies. The euro traded at $1.1877, down from $1.1905. The dollar bought 119.07 yen, up from 118.18. The British pound was quoted at $1.7241, down from $1.7354.


11:30AM Major averages came off intraday highs.
Market averages were supported by strong buying interest, though they lost some of the earlier gains. The Dow Jones came off intraday highs, trading up 82 points. The Nasdaq was also trading below the highest morning session levels, currently posting an advance of 11 points. All ten sectors continue to post gains with the semiconductor sector providing a strong support to the Nasdaq which managed to from recent losses. Computer hardware was another strong arm of tech support. Bond prices headed lower, with the yield on the 10-year Treasury note rising to 4.77% from 4.72% late Thursday.

American International Group ((AIG)) stood out as the most conspicuous gainer among Dow components. The stock rose 1.6%, climbing to over a 2-week high. General Electric ((GE)) was another strong performer, rising 1.2%, over a 2-week high. Procter & Gamble ((PG)) gained 1.1%, setting a new 52-week high. Of all 30 Dow components only Pfizer ((PFE)) traded in the negative, falling by 0.1%.


10:30AM U.S. Stocks managed to build on upward momentum.
Friday session started mixed with the blue chips supporting the Dow but the Nasdaq moving to the downside on weak tech and biotech stocks. Recently averages managed to build on upward momentum. The Nasdaq pushed upward to enter the positive territory, gaining 0.2%. Meanwhile, the Dow reached its intraday high, rising 0.5%. On the economic news front, The U.S. Commerce Department revealed that January inventories at wholesalers edged up by 0.1% to a seasonally-adjusted level of $362.81 billion, slightly higher than economists had predicted.

The bank sector rose 0.7%. AIG ((AIG)) boosted both the sector and the Dow. Insurance, brokers, REITs, and banks outperformed. Littelfuse ((LFUS)), circuit protection products supplier, was one of the most conspicuous gainers in the early going, up 15% after it reported higher Q1 guidance. Allion Healthcare ((ALLI)), specialty pharmacy services provider, stood out as one of the worst performers. The company’s shares dropped 18% after it said it will restate its Q2 results.


9:45AM- Stocks opened mixed.
Stocks opened mixed Friday. The Dow rose 0.4%, lifted by gains in AIG ((AIG)), Verizon ((VZ)) and Honeywell ((HON)). The Nasdaq was more than 3 points below the flat level. Better-than-expected job creation data confused investors as on the one hand it met, even exceeded expectations, but on the other raised concerns about interest rates.
Housing stocks moved slightly up, trying to recover after rising treasury yields sent them lower. Retail and broker/dealer stocks also posted modest strength. The gold sector dropped again Friday, down 1.8%, reaching its lowest levels in two months. The sector tried to stabilize on Thursday, following a 3- day losing streak.
Technology stocks posted some weakness, with the disk drive, Internet and networking sectors sitting modestly below the unchanged mark. Energy stocks also moved to the downside, as light, sweet crude inched up.


9:00AM – Stock futures pointed to a slightly higher start.
U.S. stock futures indicated a slightly higher opening on better-than-expected job creation data. On Thursday stocks closed lower as they came under pressure after the initial higher start. The Nasdaq was the biggest decliner, falling to a month-low on disappointing news from the semiconductor sector which added to the tech sector recent losses and nervousness ahead of monthly employment report. On Friday, the Labor Department released the report on February employment, showing that the economy added more jobs than expected. The U.S. economy added 243,000 jobs, versus expectations of a job growth of about 220,000 compared to the increase of 193,000 originally reported for January. S&P 500 futures for June were up 2.60 points, above fair value. Dow Jones industrial average futures for June climbed 22 points, and Nasdaq 100 futures for June were up 4.50 points.


Crude oil prices hovered round $60 on worries that further militant attacks will disrupt Nigeria’s oil production. Light sweet crude April delivery gained 2 cents to $60.49 a barrel. Gasoline added 1 cent to $1.7337. London Brent rose 19 cents to $61.25. European gold traded mixed. In London gold fell to $543.10 bid per troy ounce, down from $547.30. In Zurich the precious metal traded unchanged at $546.10. In Hong Kong gold dropped 70 cents to $546.10. Silver opened at $10 per troy ounce, up from $9.90. The U.S. dollar was mixed against other major currencies. The euro traded at $1.1921, up from $1.1905. The dollar bought 118.29 yen, up from 118.18. The British pound was quoted at $1.7369, up from $1.7354.


Job growth in February exceeded expectations.
The Department of Labor released its report on the employment situation in the month of February, showing that the economy added more jobs than anticipated. At the same time, the report showed that the unemployment rate edged slightly higher. The report showed that the U.S. economy added 243,000 jobs in February following a downwardly revised increase of 170,000 jobs in January. Economists had been expecting job growth of about 220,000 compared to the increase of 193,000 originally reported for January.

The Labor Dept. noted that job gains occurred in construction, financial activities, health care, and several other industries. While the bigger than expected increase in jobs may generate some optimism about the strength of the labor market, it may also raise concerns that a tight labor market could lead to higher wages and subsequently higher inflation. Traders have grown increasingly concerned about inflation recently, as they attempt to gauge the outlook for interest rates. The Federal Reserve is holding a two-day meeting on interest rates later this month, with many analysts expecting another rate hike. As mentioned above, the Labor Dept. report also showed that the unemployment rate edged up to 4.8 percent in February from a 4-1/2 year low of 4.7 percent in January. Economists had expected the unemployment rate to remain unchanged.


Ann Taylor Turns Tide, Crosstex Energy in the Green, Young Broadcast Loss Deeper.
Young Broadcasting, ((YBTVA)), media firm, reported a Q4 net loss of 71 cents a share, much wider than loss of 6 cents a share a year-ago on revenue decline. Station operating performance dropped to $12.4 million from $22.9 million. The company’s loss was wider than the predicted by analyst loss of 63 cents a share.

Ann Taylor Stores Corp, ((ANN)), apparel retailer, reported Q4 net income of 38 cents a share, swinging from a loss of 18 cents a share year-ago. If not for special items, the company would have reported income of 43 cents a share for Q4. Sales grew up 17.8% from the prior year, and comparable-store sales rose 6.8%. The company missed analysts’ forecasts for earnings of 40 cents a share.

Crosstex Energy Inc, ((XTXI)), natural gas company, reported Q4 net income of 33 cents a limited partner unit, up from 23 cents a unit. Net income in Q4 of 2005 was influenced by a $2.3 million gain from the mark-to-market valuation of the derivative financial instruments purchased to protect against liquid prices fluctuations in conjunction with the South Louisiana processing business. The corporation reported Q4 net income of $3.47 a share, up from 19 cents a share a year ago. Q4 net income included a non-cash gain on issuance of units of the partnership of $65.1 million connected with the partnership's offering of 6.6 million units during Q4.

Kirkland's, Inc., ((KIRK)), specialty retailer of home decor, reported Q4 net income was 51 cents a share, down from 59 cents per share in the year-ago period. Net sales rose and comparable store sales declined 5.0% compared with a 4.2% decrease for Q4 of 2004.

Superior Industries International Inc, ((SUP)), designer and manufacturer motor vehicle parts and accessories, reported a Q4 loss of 72 cents a share, reversing from a net income of 45 cents a share in the year-earlier period on 6.7% revenue decline, missing analyst estimate for earnings of 22 cents a share before items. Superior reported that Q4 of 2005 loss incorporates $45.7 million in charges for writing off assets in its suspension components and wheels businesses. The company said that its industry was still in the midst of a transformation that had to fully run its course, that was why, the uncertainty about the outlook was unusually high.


8:00AM The Bank of Japan abandoned easy monetary policy.
Asian-Pacific benchmarks closed mixed. The Nikkei extended yesterday’s gains, rising 0.5% to 16,115.63, supported by optimism in domestic economy after the Bank of Japan said it would end its five-year-old quantitative easing, but retain its zero-interest rate. The Japanese index advanced despite a weaker close of U.S. markets and disappointing economic data. Leading gainers were autos and banking issues. Across the region, South Korea’s Kospi climbed 0.7%, ending a three-day losing streak, helped by stronger tech stocks, while Hong Kong’s Hang Seng declined 0.4% on interest-related uncertainty. Indian stocks surged to 1.8%.

European stocks dropped at mid-day dealings, reflecting lower close on Wall Street, interest-rate concerns and cautiousness ahead of non-farm payrolls data release. Decliners included miners like Anglo American, down 2.1%, banks such as ABN Amro, down 0.5%, and aerospace defense contractor Thales, falling 0.7%. The German DAX 30 fell 0.3%, the French CAC 40 declined 0.1%, and London FTSE 100 lost 0.1%. The euro rose 0.2% versus the dollar to $1.1918.