unemployment

U.S. Equity Markets Closed for Good Friday

U.S. Session Key Developments

•    U.S. Economy Adds Most Jobs In Three Years
•    Stock-Index Futures and Dollar Index Rally, Treasuries Fall
•    Highly Anticipated Apple iPad Debuts This Saturday

There was no lack of economic activity today, despite U.S. Equity Markets being closed in observance of Good Friday.  Stock-index futures, yields on 10-year Treasuries, and the dollar all advanced after the most influential report of the month showed that employers added the most jobs in three years.  The U.S. Labor Department announced that non-manufacturing payrolls rose by 162,000 in March, prompting Treasury Secretary Timothy Geithner to say, “we’re getting stronger, and the economy is now creating jobs.”  Though the top-line figure came in slightly less than expected, it was nonetheless a strong showing for the U.S. economy.  The unemployment rate remained unchanged at 9.7 percent, the dollar index gained 0.5 percent, and 10 Year Treasury yields rose 8 basis points.

Written by Gary Chalik, CFDTrading Research
Please send any comments about this report to GChalik@fxcm.com

unemployment

Investors Mixed After Cryptic Start to 4Q Earnings Season

Those investors, who entered this round of earnings season expecting good news, received it. On the other hand, those investors who were expecting abysmal indicators saw their prediction come to fruition as well. Why has this occurred? Various blue chip and financial sector earning reports released over the last week have provided anything but solid insight into what’s on the horizon for 2010. Even as companies show robust changes in their bottom lines and balance sheets, trepidation continues to linger and has proven to weigh on investor sentiment since last Monday. On the surface, much-improved earnings-per-share data suggests that equity markets are ready to continue their bull run from last March. Upon a second review, however, excitement building over a so-called “end” to the recession appears to be a bit premature.

Two trends are dominating the analysis of earnings thus far: the equity market response and the bond market response. Better-than-expected earnings-per-share data from banks have offered equity securities investors hope that profitability is resuming and earnings growth will become a positive trend going forward; yet, at the same time, the loan losses disclosed by other institutions indicates that consumers are still struggling. JPMorgan Chase & Co. exhibited both sides in their most recent earnings: while revenues surged to over $3.3 billion dollars on strong investment banking results, and thus pushing fourth quarter EPS to $0.40 (against $0.30 expected), it suffered tremendous losses on mortgage and credit card loans. Even as non-financial sector companies begin to show steady revenue growth and solid earnings data – Intel Corp and IBM come to mind first, as both outperformed analysts’ expectations – the bank data offers the most telling insight into the future of the market. Sizeable losses at banks indicates that consumer credit isn’t mending as quick as desired or forecasted, and, going forward, could remained depressed should unemployment continue to hover around ten percent for some time. If consumers and business struggle to find footing in a market about to have stimulus withdrawn from it as an asset bubble begins to build, it’s not evidently clear who will seek loans in order to trigger profit growth for banks down the line.

Written by Christopher Vecchio, CFDTrading Research
Please send any comments about this report to Cvecchio@fxcm.com

unemployment

Stocks Rise, Sending VIX To Lowest Since Before Lehman Collapsed

US Session Key Developments

• VIX Declines to Lowest Since Before Lehman Collapse
• Bank of America to Sell TALF Debt

Stocks Rise, Sending VIX To Lowest Since Before Lehman Collapsed

Stocks managed to finish the week stronger, sending the VIX volatility index to the lowest level since before the investment bank Lehman Brothers collapsed. Indeed, the so-called “fear gauge”, which measures the implied volatility of the S&P 500 using options contracts, sank to a 9-month low of 25.35. The strong start to the week may be a sign of positive sentiment leading up to the much awaiting labor data being released at the end of the week. Data is expected to reveal an Unemployment Rate shooting up 0.2 percentage points to the highest level in a quarter-decade, to 9.6% for June.

Dow 30              8529.38             +90.99                        +1.08%

The Dow saw only one stock decline today, Alcoa, after an analyst at FBR Capital Markets downgraded the aluminum producer’s share value to ‘Underperform.’

SPX 500              927.23                 +8.33                        +0.91%

Every sector in the 500-stock index finished in the green today with Financials jumping an impressive 1.37%. Bank of America swelled 3.45% after the company said it would be selling its TALF debt.

NAS 100             1844.06                +5.84                          +0.32%

Tech stocks traded stronger than that of the broader NASDAQ, moving ahead a slight 0.51% after Microsoft and Office Depot announced a special pre-sale offer to sell Windows 7.