Jobs Number Slams Stocks

Stocks plunged on Thursday, the last day of trading before the holiday weekend, on news job losses accelerated much more quickly than expected. Employers cut 467,000 jobs from their payrolls in June - about 100,000 more than analysts had been expecting.

The Dow fell 212 points as the rising job losses were interpreted as a sign the recovery may be further off than had been previously thought. The dismal news set a negative tone across all markets causing the biggest decline ahead of a July 4th holiday in over 50 years. Market volume was very light and declines were broad based.

Investors not only fled stocks, but also dumped commodities and ran for the relative safety of U.S. Treasuries. Oil slumped 3.7% to $66.94 as investors sense demand may be muted by a snail-like recovery.

Market Rebounds Strongly

Stocks rallied Thursday after a pretty choppy week. It appeared earlier in the week that the 3-month old rally had lost steam, but stocks rallied strongly on Thursday.

The latest unemployment numbers were worse than expected and surprised most economists. The number of Americans filing new claims rose 15,000 to 627,000 and the number of workers receiving benefits for a week or more rose to 6,738,000. Many analysts thought the jobless numbers would continue to move downward. Some policymakers explained the uptick as being caused by students entering the tight job market.

Treasury prices rallied as the yield on the benchmark 10-year note lowered to 3.54% from 3.68%.

Oil prices rose above $70 a barrel on Thursday. U.S. crude for August delivery rose $1.56 or 2.3% to close at $70.23. The oil market was jittery on news a militant group in Nigeria attack a pipeline.

Gold prices also rebounded on Thursday - gold closed up $5.10 at $939.50.

Whether or not the rally will continue on Friday is probably somewhat dependent on the May personal income and spending reports due out Friday morning before the start of trading.

Stocks Gain On Positive Economic News

Stocks snapped a three-day slide on news the recession may be nearing a bottom. Investors appear to have to put to rest any notion of financial Armageddon or the overall economy tumbling into a Great Depression like era. And while the recent news isn't great by any measure, at least the news isn't as bad as it has been.

The latest unemployment news showed signs the worst of the massive job losses may be over. And while no one is predicting any job growth yet, Wall Street is taking it as a positive that we're not seeing the type of deterioration in the jobless number that would show a greater downturn in the overall economy.

Also bolstering stocks on Thursday was the news the index of leading economic indicators rose in May for the second consecutive month. The index, an indicator of the economy covering the next three to six months, was taken as further proof the recession is losing steam.

Inflation Woes Clouding Recovery

The market ended lower on Wednesday, amid new worries about the pace and strength of the recovery as we put this recession in the rear view mirror.

Spiking Treasury yields and rising commodity prices are causing investors to fret that inflation could limit any recovery effort.

10 year Treasury notes hit 4% on Wednesday before closing at 3.937%. The latest government sale was met with only ho-hum demand and Russia announced it will cut its share of U.S. debt holdings. The recent up-tick in rates has driven mortgage rates to climb quickly in the last couple weeks. The 30yr. fixed mortgage rate hit 5.79%, and investors worry the climbing rate will hobble any recovery. Foreclosures are increasing in certain high-unemployment regions and home prices continue to fall in many markets. An amazing story in the LA Times reports there are 14 zip code areas in S. California where median home prices are now lower than in 1989 - and that is without adjusting for inflation, and children are purchasing equivalent homes in 2009 for less than their parents paid in 1989.

Oil prices have soared to over $72 a barrel - doubling in price since February - and again adding to the anxiety that commodity prices could stem a recovery.

The most recent Beige Book saw some minor improvement in the economy, "downward trend is showing signs of moderating." But the overall picture is still one of a slow and limited recovery with credit remaining tight, a labor market which is suffering from flat or falling wages, and commercial property vacancy rates are rising.

Stocks Slump After 4 Day Run

Stocks slipped slightly Wednesday on mixed economic news and comments from Federal Reserve Chairman Ben Bernanke.

Wednesday's stock declines were broad based - 24 of 30 Dow issues fell. The oil sector was the biggest loser of the day. Oil prices dropped sharply on data showing a larger than expected build up in inventories.

The payroll services firm ADP's unemployment figures came in higher than analysts had expected and the numbers seem to support the belief that unemployment is projected to continue well into 2010. Factory orders rose 0.7% in April .......... economists thought orders would rise 0.9% or better.

Mr. Bernanke's comments before congress appeared more pessimistic than many investors had anticipated. The Fed boss still sees a modest recovery later this year in the overall economy, but issued warnings the economy still has a lot of work ahead before we see any real growth. He also spoke of future pitfalls facing the health of the economy - he spoke bluntly about the need for lawmakers to address the ever growing debt levels. He warned of a loss of confidence if debt-to-GDP ratios continue to rise and investors begin to demand higher rates for the risk they take in buying Treasurys. Lack of action by lawmakers will eventually lead to "draconian cuts in services and very large tax increases."

Market Up and Down With Headlines

The economic picture continues to be choppy, and the market is swaying with the news cycle. The market finished Thursday with a 1.2% gain, while the broader S&P 500 added 1.5%. Most of the gains were centered on the news the most recent debt auction saw solid demand for 7-year notes. The energy sector rallied as oil prices neared $65.

The economic news for the week was a mixed bag. Initial jobless claims fell slightly, but the long term jobless rate keeps hitting new highs as it seems those who lose their jobs are finding it nearly impossible to find new jobs. Durable goods orders surged in April. New home sales rose 0.3%, but the number of homes slipping into foreclosure are at record highs and just keep increasing. Mortgage rates are moving upward at an alarming pace (5.45%), and many analysts fear if they continue to move higher it will kill off any recovery in the housing sector.

It appears that GM will move into chapter 11 this coming week and what it will look like when it comes out of bankruptcy is any body's guess. With auto sales falling off a cliff, auto suppliers are under tremendous pressure and many Detroit watchers predict a cascade of vendors will eventually file for bankruptcy before the auto sector rebounds.

Market Slump Extends to 3rd Day

Stocks closed sharply lower as investors worried about the health of both the U.S. and global economy. A mixed bag of economic data left investors feeling pessimistic about the length and severity of the current recession.

U.S. unemployment rates continue to climb. The Labor Department reported those filing unemployment claims on an ongoing basis rose to 6.6 million - an all time high. The Federal Reserve reduced its 2009 economic growth forecast targets and offered an even bleaker estimate of future employment numbers. The feds see only a "gradual recovery," beginning in the 2nd half of 2009 and now forecast an unemployment rate above 9% and remaining above 9% through 2010. The CBO is now forecasting an unemployment rate lifting to above 10% and remaining at that point well into 2010.

Optimism about the global economy slipped down a notch or two on news of a potential downgrade of the U.K. 's credit rating. Standard & Poor's lowered its outlook for the country to "negative" from "stable." The news raised fears that other major economies, including the U.S., could face similar downgrades. Steep declines in the economies of three of the U.S.'s biggest trading partners - Japan, Germany, and Mexico - underscore the severity of the global economy. Mexico's GDP fell at an annualized rate of 21.5% in the first quarter, Japan's contracted at a 15.2% rate, and Germany at 14.4%. All three countries rely heavily on exports to the U.S. - and analysts fear the plummeting GDPs reflect American consumers are cutting back deeper than thought on purchases across the board.