Daily Market Reports | Nov 08 2008
By Greg Peel
The Dow rose 248 points or 2.9% while the S&P gained 2.9% and the Nasdaq 2.4%. The Dow ended the week down about 4% in total on what was noticeably light volume.
Friday was set to be a dose of reality in the wake of the Obama euphoria as the October jobs number was due for release. Wall Street talked itself into an ever more depressing number over the last couple of days, as expectations of 200,000 job losses soon became talk of 250,000 and then 300,000. So when the number came out as 240,000 it was considered to be bad, but not quite as bad as the panic merchants had talked themselves into.
The fact that the September number was revised to a greater loss than previously estimated, such that losses over the last three months totalled 650,000, was also accepted with a shrug. Wise traders completely ignore the jobs release given it is constantly revised for at least two months after. The unemployment rate, nevertheless, was marked at 6.5% – the highest level in 14 years.
After two days in which Wall Street sold down 10% on light volume there was always a good chance for a rally on Friday provided the jobs number was no great shock. The other event of the day was the first press conference given by the President-elect, and Wall Street was all ears looking for any clues as to what policy decisions might be made ahead. As it was Wall Street was quite pleased, given Obama was emphatic about a second stimulus package to be implemented ASAP and at the same time was sufficiently coy on the matter of tax increases that commentators were moved to suggest such a policy may even be scrapped for now.
Obama also reinforced that he would support the local auto industry – a policy pressed upon him given General Motors has only a month or two left to live without some form of assistance. GM will need to be rescued before Christmas and that will require a cooperative policy move between the lame duck – who is still the president until January – and the newbie. In the meantime, GM shares quietly work their way towards zero.
After an exhaustive, whip-saw week in currencies and commodities, Friday saw the US dollar mixed and some rare minor moves in oil, gold and base metals. Oil rose US27c to US$61.04/bbl, gold added US$1.20 to US$733.90/oz, and copper fell less than 1%.
The SPI Overnight gained 24 points.
The VIX volatility index, just out of interest, had been starting to drift down – reaching as low as 45 on Tuesday. Then we tanked again and the index shot up to 65. Last night was a return to easing and the VIX ended the week at 56. If the index continues to trade at high levels (and bear in mind 35 was once considered a high level), which signifies Wall Street still wants to pay up for portfolio protection, then the stock market will remain volatile and struggle to advance in any orderly fashion. These things take time.
Tune into Sky Business between 9-10am on Saturday for a repeat of Rudi banging on from Friday.
