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Daily Analysis – Stocks Mixed As US Payroll Data Disappoints

 November 07, 2011 09:16 AM


Equities

Asian markets rallied after Greece canceled a call for a national referendum on the recent bailout deal.  The Nikkei climbed 1.9%, although Sony shares dropped 7.9% after lowering its outlook for the 4th quarter.  The Kospi and Hang Seng both surged 3.1%, and the ASX 200 advanced 2.6%, led by miners. China's Shanghai Composite closed with a gain of .8%.

European markets slumped, as disappointment over the G20 meeting weighed on investors.  Despite high hopes, the meeting generated little support for Europe's bailout fund.  The DAX tumbled 2.7%, the CAC40 slumped 2.3%, while the FTSE escaped the wreckage, easing just .3%.

Germany's DAX Tumbles 2.7%

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US payroll data showed job growth was significantly lower than expected, gaining just 80K jobs October.  Economists had forecast a jump of 95K jobs. USstocks closed modestly lower, but were well off their session lows.  The Dow dropped 61 points to 11983, the Nasdaq slipped .4% and the S&P 500 declined .6%.  The VIX eased slightly, settling just above 30.

Starbucks shares jumped 6.7% after reporting strong profits, while AMD shares fell 1% due to a weak PC market.

Groupon's IPO was a huge success, with shares closing at 26.11, after the IPO priced at $20 a share.

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Treasuries and Commodities

Bonds rose, with 10-year notes up 11/32 to yield 2.03%, and 30-year notes gained 20/32 to yield 3.09%.

Energy ended modestly higher, with crude oil up .2% to 94.28, gasoline up .8% to 2.6643, and natural gas up .1% to 3.783.

Metals declined, led by silver which dropped 1.2% to 34.084.  Gold fell .5% to 1756.10, and copper fell .7% to 3.5654.

 

Currencies

The Canadian Dollar dropped 1% to 1.0188, after employment data showed an unexpected drop in jobs.  The Swiss Franc fell .9% to 1.1287, and the Euro fell .2% to 1.3782.  The Pound closed flat, and the Yen eased .2% to 78.24.

 

Economic Outlook

While the jobs report was weaker than forecast, the unemployment rate declined to 9% from 9.1%.  The economy does appear to be growing, although much slower than desired.

Monday's sole report will be consumer credit, which last month dropped by $9.2 billion.

Earnings are due from Dryships, Dish Network, and Sotheby's.

 

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