Daily Market Reports | Oct 03 2009
By Andrew Nelson
The Dow finished 23 points or 0.2% lower, while the S&P 500 and the Nasdaq both gave up nearly half a percent.
Stocks opened well lower on Wall Street, taking a lead from yesterday’s shellacking and not getting much help early on from a worse than expected unemployment report that was out before the bell. But by lunch time the major gauges were back close to even and went on to spend the afternoon moving from plus to minus. It seemed for a while that much of the more timid blood was let over the course of the week, but buyers were still scarce in the last hour of trade, meaning any hope for a positive finish was misplaced.
The day’s big news was the US Labor Department’s monthly employment report, which followed on with the week’s trend of negative results among some of the key indicators. The same indicators that up until this week had been improving over the past few months.
The Labor Department confirmed that the unemployment rate climbed to 9.8% in September (up from 9.7%, but short of the 9.9% expected) , while non-farm payrolls dropped by 263,000 in September, which was far worse than the 175,000 or so decrease in jobs the market was expecting.
In other economic news, the US Commerce Department said factory goods orders fell 0.8% in August, brought down by a lower demand for airplanes. This came a day after the ISM reported its gauge of manufacturing pulled back last month. The decline in factory goods snapped what had been a string of increases and gives a good indication that any recovery in manufacturing will be ridden along a bumpy road.
From the rally highs hit last week, stocks have lost about 5% now, with the selling really unsurprising given the big run from July through September in which the Dow and S&P 500 both jumped 15%, their biggest quarterly gains in more than a decade. But as less than impressive reports flowed in though the course of the week (such as key readings on jobs, manufacturing and consumer confidence) and what was fairly unbridled optimism has been forced to take a back seat to a bit of old fashioned pragmatism.
That said, this week’s run of lacklustre data hasn’t sparked that much talk of a so-called double-dip recession – a theory that was so in vogue last month. It seems few are yet convinced markets will suffer a second downturn before they have fully recovered from the one that began in late 2007. Here’s hoping this optimism, or at least the lack of outright pessimism, continues to persevere, because another week like this one will surely be a test.
Both the S&P 500 and Nasdaq fared worse than the Dow on today’s trading, with a 1.1% decline in the recovery-sensitive industrial and tech sectors doing most of the damage. Still, tech major Apple shrugged off the sector’s pull, gaining more than 2% after both Morgan Stanley and UBS issued bullish notes on the company’s forecast.
Shares of troubled commercial lender CIT Group also rallied following news that the company is launching a debt-exchange plan in hopes of avoiding a bankruptcy filing. JP Morgan and US Bancorp were also among the advancers in a finance sector that remained fairly solid throughout the day’s trade.
Another stand out was General Electric, whose shares ran more than 4% higher as speculation continue to abound about whether Comcast will buy a 51% stake in GE’s NBC Universal unit.
The US dollar tracked the equities market lower, down against about everything except the Aussie. The greenback dropped 0.2% against a basket of currencies as hopes for some speedy US economic growth over the next month or two began to fade. The move helped gold erase its Thursday losses, with the precious metal pushing back above US$1,000 an ounce to $1,001.70.
However, oil prices were unable to take advantage of the slide in the dollar, reducing what were still weekly gains on renewed concerns that the US economic recovery will be slow and energy demand will take a long time to rebound. Crude oil for November delivery fell US87c, or 1.2%, to US$69.95 a barrel on the New York Mercantile Exchange.
Basemetals.com reports that base metals fell steadily over the course of the day and were especially weak after the key US non-farm payrolls report came out. The complex still managed to pare its losses by the close, although downbeat sentiment could weigh next week with China off work because of the Golden Week holiday.
Global markets fared much worse than New York. In Europe, London’s FTSE 100 lost 1.2%, France’s CAC 40 lost 1.9% and Germany’s DAX lost 1.5%. Yesterday, Asian markets declined as well, with the Japanese Nikkei losing 2.5%.
The weak close on Wall Street and the continuing run of less than rosy economic news from Australia’s biggest business partner had local traders on the back foot, with the SPI Overnight down 21 points.
