by Martin Denholm
Another big day for Wall Street looms this Friday.
Being the first Friday of the month, we'll get the latest monthly unemployment reading from the Department of Labor - a release that always has Messrs. Rick Santelli and his fellow TV cronies breathlessly awaiting it, before launching into a hyperbolic waffle-fest about what it all means.
All monthly job reports are significant, of course. But this one could be more so because it will be a test of the stock market's recent strength.
As we've argued here before, the speed and power of the current rally, while impressive, probably isn't sustainable. Markets never move up and down in straight lines, and new bull markets rarely (if ever) start from a bear market rally - which is probably what this is.
And depending on what the job report says, it could go a long way to showing whether the rally that has blasted stocks some 35% higher from their 2009 lows is built on rock or sand.
The Job Report - A "Credibility Test" For Obama & Bernanke
The job report will also be a mini-test of the credibility of President Obama and Fed chairman Ben Bernanke - both of whom have sounded a little more upbeat on the economy recently. (No word yet on whether the "glimmers of hope" that Obama has spied are, in fact, "glimmers of hope and change!")
While we have seen a small uptick in some economic data like services, manufacturing, and housing, the main ones that drive the economy are still stubbornly stuck in reverse. A couple of weeks ago, my colleague Karim noted the patchy performance of the Leading Economic Indicators index.
And the most important economic driver - the job market - has taken a worse beating over the past 15 months than English boxer Ricky Hatton last Saturday. Since December 2007, 5.1 million Americans have lost their jobs - two-thirds of them coming since November 2008.
But could Friday's report signal a change in tone? I'm not talking about a positive figure - far from it - but current estimates put April's number at about 603,000 losses. From "ugly" to "less ugly," you might say, given the 663,000 losses in March.
And a report from recruitment and consulting firm Challenger, Gray & Christmas today showed that planned job cuts from U.S. employers shrank from 150,411 in March to 132,590 in April - a 12% drop.
While that's 47% higher than April 2008, and the 711,100 year-to-date cuts is a 145% jump from the January-April period in 2008, taken over the short-term, April's number was the third straight monthly decline. You gotta start somewhere.
And despite what the media say, the figures aren't all bad…
America's Biggest Retailer Is Still Hiring
Even in midst of the worst recession since the Great Depression and a 25-year high jobless rate of 8.5%, there are some companies that are still hiring. After all, while the headline Department of Labor figures show the number of jobs lost, it doesn't mean that nobody at all was hired.
The International Herald Tribune (IHT) reports that there were three million job openings nationwide in February. Of course, with more than 13 million unemployed, competition for those jobs is stiff, but Bureau of Labor Statistics (BLS) show that 4.3 million Americans actually found work in February.
With plans to open 150 new stores this year, one firm that should rachet up its hiring is a biggie - Wal-Mart (NYSE: WMT). The firm expects to hire its U.S. workforce by 50,000 this year.
Moreover, with the government's wide-ranging stimulus packages still trickling down, other areas that could see a boost in hiring include healthcare, and infrastructure firms.
As I write, the market is feeding off news from a report from ADP Employer Services, which said U.S. companies shed 491,000 jobs in April, significantly lower than the 645,000 in a Bloomberg economist survey.
It's important to note, though, that the ADP doesn't report data from government agencies… just private employment. The real litmus test of the economy and stock market's health will come at 8:30 AM on Friday.