Monday, October 08, 2007
What is Going On?
Major market indices move to new highs on solid jobs data Friday. The Dow ended the session with a gain of 91.70 points to close at 14,066.01. The SPX added 14.75 points closing at 1,557.59. We are in the green and ok though would welcome some down movement this week.
September jobs data provided incentive for the bulls, although the data might have convinced the Fed to leave rates unchanged this month. Nonfarm payrolls rose by 110,000, in line with estimates. However, August’s initial decline of 4,000 was revised to a gain of 90,000. This shows that the economy remains solid and that August’s tough reading was not really as weak as initially thought.
One problem in the report is the gain of 0.4 percent in average hourly earnings. This puts the year on year gain at 4.1 percent and could present inflation concerns for the Fed. It doesn’t help that oil prices remain elevated though crude fell 45-cents Friday to close at $80.99 a barrel.
Fridays data did push the Dow and SPX to new intraday highs and the Nasdaq hit a new 7-year high. However, traders now need to digest third quarter earnings results and the outlook from U.S. corporations. Merrill Lynch joined the ranks of financial companies warning about third-quarter earnings today. The financial giant stated it will write down more than $5 billion due to problems in the financial markets. Nonetheless, traders have priced in the negative news and the stock gained 2.5 percent Friday!
Earnings season kicks off this week with Alcoa reporting after the close Tuesday but main news will come Friday with the retail sales reports and producer price reports.
Lets see what happens.
Until next time.
September jobs data provided incentive for the bulls, although the data might have convinced the Fed to leave rates unchanged this month. Nonfarm payrolls rose by 110,000, in line with estimates. However, August’s initial decline of 4,000 was revised to a gain of 90,000. This shows that the economy remains solid and that August’s tough reading was not really as weak as initially thought.
One problem in the report is the gain of 0.4 percent in average hourly earnings. This puts the year on year gain at 4.1 percent and could present inflation concerns for the Fed. It doesn’t help that oil prices remain elevated though crude fell 45-cents Friday to close at $80.99 a barrel.
Fridays data did push the Dow and SPX to new intraday highs and the Nasdaq hit a new 7-year high. However, traders now need to digest third quarter earnings results and the outlook from U.S. corporations. Merrill Lynch joined the ranks of financial companies warning about third-quarter earnings today. The financial giant stated it will write down more than $5 billion due to problems in the financial markets. Nonetheless, traders have priced in the negative news and the stock gained 2.5 percent Friday!
Earnings season kicks off this week with Alcoa reporting after the close Tuesday but main news will come Friday with the retail sales reports and producer price reports.
Lets see what happens.
Until next time.
# posted by Paul @ 4:29 AM 
