The US equity market weakened badly into the close as traders were thinking
ahead to this morning’s US Jobs Report for July. On Wednesday, the ADP data
showed a surprising growth in jobs, but yesterday the jump in weekly jobless
claims showed just the opposite.
Early in the day, there was much talk about the shocking revision to 4Q07 US
GDP, which now shows a shrinking economy. After today’s Jobs Report, traders
will be focused on another busy day of corporate earnings reports.
At the close, the DJIA (-205.67 -1.78% to 11378.02), S&P 500 (-16.88
-1.31% to 1267.38), and the NASDAQ Composite (-4.17 -0.18% to 2325.55) fell hard
after two days of solid gains.
The Energy Sector (XLE -4.1%) was the weakest, following the prior day where
the gain of +6.0% was by far the strongest. Industrials (XLI -3.1%) and Consumer
staples (XLP -1.6%) were also weak. Strongest on the day was Healthcare (XLV
+0.1%), which was the only sector that gained and that was due to the +4.1% gain
in Biotech ($BTK).
Of the industry groups, Papers were very strong, up +11.5%, due to the
sparkling performance of International Paper (IP), where Q2
earnings jumped +20% and the stock
lifted +14.0% on the day.
BMW, however, issued a profit warning, saying it would not reach 2008 goals
due to rapidly deteriorating economic conditions in the world. Also, General Motors (GM)
has reported a loss of -$15.5 billion for Q2.
The IndyMac bank that was recently taken over by the FDIC has declared
Chapter 7 bankruptcy.
Two of Japan’s biggest banks (Mizuho and Sumitomo Mitsui) reported Q1
weakness, which took the Nikkei 225 down -2.11% today, closing at 13094.59 for a
250 point loss on the week. Australia’s All Ords index also dropped, closing at
4978.0 (-1.48%). But, Shanghai (+0.94% to 2801.8), Hong Kong (+0.58% to 22862.6)
and India’s Sensex (+2.26% to 14680.2) (with a closing hour flourish), closed
higher today.
Strongest one day; weakest the next: the Oil Services ($OSX -4.2% following a
gain of +6.1%) and Integrated Oils ($XOI -2.8% following a gain of +5.8%) were
the leaders on the downside yesterday. NatGas ($XNG -2.2%) and Goldminers ($XAU
-1.7%) were also weak.
In extreme Cara 100 trading, the natural resource players were weak: NUE
(-5.0%), SU (-4.8%), XOM (-4.7%), POT (-4.3%) and GG (-4.2%). BA and DIS also
each dropped -4.2%. The leaders were: MICC (+6.0%), RIMM (+3.0%) and SNDK
(+2.8%).
In the Cara 100 stocks, Boeing (BA) set a 52-week low yesterday at $61.01,
and so did Toyota (TM) at $85.59. Qualcomm (QCOM) set a high at $56.00.
The bond and forex markets were quiet again. The long bond ($USB) managed a
solid gain (+0.6% to 115.50), mostly because of the safe-haven move from riskier
equities, and to the downward revision of 4Q07 US GDP. The $USD lost -0.15% to
$0.7323 and the Euro gained +0.15% to 1.5601.
In Europe at 7:09am ET (1209 GMT), the French CAC was down -0.78% to 4358;
the German DAX down -0.49% to 6448; and the UK FTSE down -0.15% to 5404.
Precious metals are quiet. At the close yesterday, $GOLD was up +$10.40/oz to
922.70, while Crude Oil dropped -$2.69/bbl to 124.08.
Earlier this morning the USD was at $0.7348 and the Euro at 1.5532, with the
USD gaining moderate strength from yesterday morning, and the Euro losing
it.
Spot prices at about 7:11am ET are for gold, palladium, platinum and silver
per oz (vs the prices in the past four mornings): 911.30 (910.80, 902.36, 925.31
and 930.05); 371 (374, 377, 386 and 383); 1713 (1751, 1740, 1763 and 1752); and
17.58 (17.53, 17.02, 17.41 and 17.42).
Crude Oil futures this morning are softer at 122.88, while the DJIA futures
are up a bit (+29) to 11388.
Comments & Outlook
The big news will happen in a couple minutes and that is the US Jobs Report
for July. This is a report that is highly spun by the Talking Heads on Financial
Entertainment Television.
But, don't take your eye off the numerous earnings reports that will come
today.
