(Source: Canada Newswire)
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Bank of America (BAC), GE (GE) and Citigroup (C) were all down Thursday on heavy volume.
Investors are taking their gains following the release of worse than expected economic news on job losses last Thursday. On Thursday, according to the US Department of Labor, the number of jobs lost in the USA in May was more than 50% higher than what analysts had expected!
The jobless rate (9.5%) is the highest it's been since 1983.
The jobless rate is at the highest level it has been at since Ronald Reagan's economic reforms started to gain traction. Psychologically, this is significant because it reminds Americans of the previous period in history where everyone was wondering out loud about the end of American global dominance and confidence in America herself was at all time lows.
In the early 80's, Reagan managed to resuscitate the American economy and usher in two and a half decades of almost uninterrupted economic growth. The issue is whether or not those gains have been completely wiped out. The bigger issue is whether those losses are temporary or permanent.
Confidence in America itself is critical to investors having confidence in its equity markets.
Taking gains generally is a sign that many investors do not believe that the recent rally is a significant and sustainable upward trend.
Investors are also concerned with the mixed messages that they have been receiving. On June 25th, negative economic data from the Labor Department was reacted to by a significant market rally. Yet, only one week later, with similarly bad news, the market went down over 220 points during last Thursday's trading.
Futures are down again this morning indicating that enthusiasm for a quick recovery has been replaced by pessimism that the recession likely won't end any time soon. There were positive signs of hope that the downturn was nearing an end, but other data, including the jobless rate, indicate that it may only be the end of the beginning.
Big companies are being hammered.
