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Stocks Showing A Lack Of Direction In Early Trading
Stocks are
turning in a lackluster performance in early trading on Friday, as
traders digest the monthly jobs report. The major averages are lingering
near the unchanged line, holding on to yesterday's substantial gains.
The major averages have moved to the upside in recent trading and are currently posting modest gains. The Dow is up 26.69 points or 0.2 percent at 13,318.69, the Nasdaq is up 1.50 points or 0.1 percent at 3,137.31 and the S&P 500 is up 5.08 points or 0.4 percent at 1,437.20.
The
choppy trading comes on the heels of the release of a report from the
Labor Department showing weaker than expected job growth in the month of
August.
While the data points to continued sluggishness in the
labor market, it has also increased optimism about further monetary
stimulus from the Federal Reserve.
The report showed that employment increased
by 96,000 jobs in August following a downwardly revised increase of
141,000 jobs in July. Economists had expected an increase of about
125,000 jobs compared to the addition of 163,000 jobs originally
reported for the previous month.
Despite the weaker than expected job growth, the unemployment rate
dropped to 8.1 percent in August from 8.3 in July amid a notable
decrease in the size of the workforce. The unemployment rate had been
expected to come in unchanged.
Peter Boockvar, managing director at Miller Tabak,
said, "Bottom line, lame job growth continues, averaging just 139,000
per month year to date, but all the markets are focused on is how
central bankers will deal with the slowdown with more policy action.
Ben's B52 will drop more money next week."
Most of the major
sectors are showing only modest moves in early trading, although
considerable strength has emerged among steel stocks. The NYSE Arca Steel Index has surged up by 4.1 percent, adding to the 3.8 percent gain it posted on Thursday.
The strength among steel stocks
may partly due to news that China's National Development and Reform
Commission approved more than $150 billion in infrastructure projects to
help stimulate the economy.
Gold stocks have also shown a
strong move to the upside, moving higher along with the price of the
precious metal. Oil service, airline, and banking stocks are also seeing
early strength, while weakness is visible among semiconductor stocks.
The weakness in the semiconductor sector comes after industry giant Intel (INTC) cut its third quarter revenue guidance as a result of weaker than expected demand.
In overseas trading, stock markets
across the Asia-Pacific region moved sharply higher on Friday on the
heels of the overnight rally on Wall Street. Japan's Nikkei 225 Index
surged up by 2.2 percent, while Hong Kong's Hang Seng Index soared 3.1
percent.
The major European markets have also moved to the upside, adding to yesterday's gains. While the U.K.'s FTSE 100 Index has edged up by 0.2 percent, the German DAX Index and the French CAC 40 Index are both up by 0.8 percent.
In the bond market, treasuries have
moved sharply higher on the heels of the disappointing jobs data.
Subsequently, the yield on the benchmark ten-year note, which moves
opposite of its price, is down by 7.7 basis points at 1.596 percent.
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TSX Jumps At Open Friday
Bay Street stocks
were extending gains at open Friday amid smart buying in commodities,
with the S&P/TSX Composite Index surging 73.58 points or 0.61
percent to 12,213.31.
The Diversified Materials Index added over 3
percent, with First Quantum Minerals gaining over 5 percent. Inmet
Mining and Teck Resources moved up about 3 percent each.
Among gold stocks, Agnico-Eagle Mines, Allied Nevada Gold, Barrick Gold and Goldcorp. gathered close to 3 percent each.
Meanwhile, Lululemon Athletica Inc. slipped over 1 percent despite reporting improved second quarter net income and hiking its guidance.
Media company Transcontinental Inc. dived over 3 percent after reporting a lower third quarter net income
Natural resource properties explorer PolyMet Mining Corp. slipped 1 percent after reporting a wider second-quarter net loss.
At 10:00 am ET Friday, Canada's Ivey PMI
for August is scheduled for release. Ahead of the report, the loonie
showed mixed trading against other major currencies. While the loonie
fell against the yen and the euro, it has come off from early low
against the aussie. Against the greenback, the loonie eased slightly
from a 1-year high.
At 9:55 am ET, the loonie traded at 0.9798 against the greenback, 80.00 against the yen, 1.2503 against the euro and 1.0168 against the aussie.
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European Stocks Higher At Mid-day
European stocks
rose sharply on Friday, extending the previous session's rally, after
data showed German exports increased unexpectedly in July, while
France's budget deficit narrowed in the first seven months of the year.
Another report released by the U.K. Office for National Statistical Office
showed that U.K. industrial output rose 2.9 percent month-over-month in
July, reversing all of the 2.4 percent drop in June. Economists
expected a more modest 1.5 percent increase.
With the ECB's
bond-buying plan keeping the underlying mood upbeat, investors are
looking forward to U.S. employment data later in the global day for
fresh cues from Federal Reserve on possible policy action.
Asian stocks
rose sharply today, with Chinese and Hong Kong shares climbing 3-4
percent after Beijing unveiled massive infrastructure investment plans
to support the economy. U.S. stock futures are also rising, signaling
the Standard & Poor's 500 index will extend yesterday's biggest
rally since 2008.
The Euro Stoxx 50 index of eurozone bluechip stocks is moving up 1.26 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is gaining marginally. Around Europe, the U.K.'s FTSE 100, Switzerland's SMI, the German DAX and France's CAC 40 are rising between 0.2 percent and 1.1 percent.
In stock-specific action, Deutsche Bank is climbing 5.6 percent in Frankfurt amid reports that the bank plans to eliminate more jobs than previously planned. Rival Commerzbank is rallying 6.4 percent.
Shares of Air France-KLM are climbing 3 percent in Paris after the Franco-Dutch airline reported
slight increases in passenger traffic and capacity for August, mainly
benefiting from increased business in Europe and Asia-Pacific regions.
However, all regions recorded sharp decline in cargo traffic.
Shares of Deutsche Post
are down 3.6 percent after Germany's state-owned development and
infrastructure bank KfW Bankengruppe, the largest shareholder of the
German postal and logistics firm, said it would cut its holding in
Deutsche Post by 5 percent.
Glencore International shares are down 4 percent in London after the Swiss mining company raised its offer for miner Xstrata Plc.
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Asian Stocks Rally On ECB Bond-buying Plan
Asian stocks
rallied on Friday, boosted by strong advances in the U.S. and European
markets overnight after the European Central Bank unveiled a bond-buying
program to ease Europe's debt crisis. Chinese shares were at the
forefront following reports Beijing is accelerating infrastructure
spending to bolster growth. Market attention now turns to U.S.
employment data scheduled to be released tonight, as the report may have
some bearing on the Fed's next policy meeting scheduled for next week.
Tokyo stocks
posted sharp gains, with the Nikkei average rallying 2.2 percent to its
highest level since August 30 as the ECB's latest plan to buy
government bonds issued by southern European nations eased investor
fears of contagion from Greece and Europe. The yen's slide also helped
lift investor mood. The broader Topix index advanced 2.3 percent, with
31 of its 33 sub-indexes ending in positive territory.
Steelmakers
such as Nippon Steel and JFE Holdings soared 9-11 percent on optimism
over Chinese demand amid reports that China's top planning agency has
approved 30 infrastructure projects, adding to Wednesday's announcement
of 25 new rail projects. Shipping line Mitsui OSK rose 4.4 percent,
insurer Dai-ichi Life Insurance jumped 8.2 percent and brokerage Nomura
Holdings climbed 4.5 percent.
Automakers and machinery makers
also rose sharply, with Honda Motor up 5.2 percent and Komatsu climbing
6.6 percent. Among electronics and precision instrument manufacturers, Canon, Pioneer, Sony and Tokyo Electron gained 4-6 percent. Japan Tobacco tumbled 4.3 percent on renewed concerns that anti-smoking regulations globally might be emulated in Japan as well.
China's Shanghai
Composite index jumped 3.7 percent, its biggest single-day percentage
gain in nearly eight months, after the government unveiled massive
infrastructure investment plans to support the economy. Financial and
construction shares led the rally amid hopes the government will
announce more pro-growth policies when China's new administration takes
office in March 2013. Hong Kong shares followed suit, lifting the
benchmark Hang Seng up about 3 percent.
Australian shares posted modest gains, with selling in domestic-oriented companies limiting further upside. The benchmark S&P/ASX 200 rose 0.3 percent, while the broader All Ordinaries index added 0.4 percent. Among the major miners, BHP Billiton and Rio Tinto
rose 2-4 percent, while Fortescue Metals jumped over 11 percent on
bargain hunting after shares hit a fresh three-year low yesterday. Banks
ended subdued, with ANZ, Commonwealth and NAB all dropping about 0.2 percent each, while Westpac fell 0.8 percent.
Defensive stocks like CSL and Cochlear fell
about 2 percent each on profit taking after gains in the past few
months, while retailers Woolworths and Wesfarmers lost around a percent
each. Shares of Consolidated Media Holdings edged down 0.6 percent after
the company backed a revised takeover offer from Rupert Murdoch's News
Corp.
South Korea's Kospi average jumped 2.6 percent,
posting its largest gain in six weeks, as stocks saw buying across the
board, boosted by the bond-buying plan unveiled by the ECB to contain
the euro zone debt crisis. Market heavyweight Samsung Electronics climbed about 4.5 percent, while shipbuilders Daewoo Shipbuilding, Hyundai Heavy Industries, Hyundai Mipo Dockyard and Marine Engineering soared 5-9 percent.
In
economic news, Fitch Ratings has upgraded South Korea's long-term
foreign-currency issuer default rating to 'AA-' from 'A+', reflecting
the country's continued economic and financial stability in the volatile
global environment. The agency also maintained its 'stable' outlook on
the economy, citing the country's strong macroeconomic policy framework,
including sustained fiscal discipline and strong structural
fundamentals.
New Zealand shares rose notably, lifting the NZX-50 index
up 0.8 percent above 3700 for the first time since February 2008.
Online auction site Trade Me rose 2.8 percent to a three-month high on
news that shares of the company will enter the S&P/ASX 300 Index on September 21.
Gold miner OceanaGold
rallied 3.3 percent, national carrier Air New Zealand advanced 1.4
percent, heavyweight Telecom, which looks attractive with a 12 percent
dividend yield, edged up 0.6 percent and Fletcher Building, the nation's
largest construction company, gained 0.3 percent, while retailer
Warehouse Group fell 1.7 percent after reporting a 14 percent drop in
full-year earnings.
Elsewhere, India's benchmark Sensex was last rising 2 percent, Indonesia's Jakarta Composite index added a percent, Malaysia's KLSE Composite edged up 0.4 percent, Singapore's Straits Times index rose 0.8 percent and the Taiwan Weighted average closed up 1.3 percent.
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Crude Firm Above $95
The price of crude oil was ticking higher Friday morning as the U.S. dollar was mixed ahead of jobs data from the U.S.
Light Sweet Crude Oil
(WTI) futures for October delivery, edged up $0.22 to $95.75 a barrel.
Yesterday, oil ended higher after the European Central Bank announced
the much awaited, new bond-buying program that is expected to help
troubled economies of the euro area. Oil prices were also aided by the
Energy Information Administration's weekly report that indicated a
more-than-expected decline in U.S. crude inventories last week.
Thursday
during trading hours, the the EIA revealed that U.S. crude oil
inventories dipped 7.40 million barrels and gasoline stocks were down
2.30 million barrels in the weekended August 31. Analysts expected crude
oil inventories to dip by 5 million barrels and gasoline stocks to shed
3.50 million barrels last week.
This morning, the U.S. dollar
was extending its two-month low versus the euro and four-month low
against sterling. The buck was moving up toward a three-week high versus
the yen and trading higher against the Swiss franc.
In economic
news, Germany's exports and imports increased unexpectedly in July, data
from Destatis revealed. Exports grew 0.5 percent month-on-month,
partially offsetting June's 1.4 percent fall. Likewise, imports gained
0.9 percent after falling 2.9 percent in June. Economists had forecast a
0.5 percent drop in exports and 0.3 percent decrease in imports.
Meanwhile, U.K. industrial production
recovered in July at a faster than expected pace, data from the Office
for National Statistics showed. Industrial output grew 2.9 percent
month-on-month, reversing June's 2.4 percent fall. The increase exceeded
the 1.5 percent rise forecast by economists.
Traders will look to the unemployment data from the U.S. Labor Department,
due out at 8.30 a.m ET. Economists expect non-farm payrolls for August
to increase by 125,000, while the unemployment rate is expected to
remain unchanged at 8.3 percent. The private sector is expected to have
added 134,000 jobs. In July, the economy added 163,000 jobs.
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