8:10am (EST)
We wanted to send this morning’s update out a little early so you can try to get a “feel” for the market today. We do our best to keep you abreast of the latest news because we know many of you don’t have the luxury of following the markets all day long and today’s action could be a game changer.
The bulls got their mouths washed out with soap yesterday after the dirty words “rising initial claims?” and “Greek bailout?” were being uttered from their mouths as they watched the Dow tank 268 points, or -2.6%, to finish at 10,002. At one point, right before the close, the Dow actually traded to a low of 9,998. Not good.
The S&P 500 was hit the hardest as the index fell 3.1%, or 34 points to close at 1,063. The Nasdaq was tagged for a 3% loss as it fell 65 points to settle at 2,125.
The resulting selloff seemed like “panic” to us which can be a good thing if you know how the crowd is going to react and we are in a correction. Thursday’s drop was the biggest one-day loss since last April and comes on the heels of this morning’s January employment report which is due out at 8:30am (EST) or 20 minutes from now.
As we were preparing today’s write-up, futures were up shortly after midnight. Dow futures were up 17 points shortly after midnight. This morning, they are down 58.
Wall Street is expecting this morning’s job report will show a small increase of 5,000 jobs. It would only be the second monthly gain since the recession began but it is likely the negativity of the headlines will lead to a lower open as futures have reversed course.
The unemployment rate is forecast to rise to 10.1% which could spook the bulls and individual investors. This number would match October’s 26-year high and it would mark the fourth-straight month of double-digits.
One sector feeling the blunt of the market and the euro’s weakness are commodities. Gold, copper, aluminum, and oil all got punished on Thursday. Gold fell $45 and closed at $1,065/ ounce yesterday while oil sank nearly $4, or 5%, and is at $73/ a barrel. The drop in gold was surprising as it usually rises in times of crisis.
Besides this morning’s jobs number there will be a number of companies reporting before the opening bell. Aetna (AET, $29.23, down $1.10), Allegheny Energy (AYE, $20.49, down $0.52), PPl Corporation (PPL, $28.62, down $0.78), Simon Property Group (SPG, $69.45, down $3.35), Tyson Foods (TSN, $13.99, down $0.36), and Weyerhaeuse (WY, $40.39, down $1.37) will all confess over the next hour.
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