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Unemployment data has equity futures mixed

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Equity futures have been bouncing around near the break-even level this morning, and the bond pits are humming. We've seen equity futures dip lower right after the release, but have since bounced back. Currently we're seeing S&P futures up 1, NASDAQ futures are up 3 and Dow futures are down 30. The shorter end of the bond market is seeing some selling and yields are rising in both the 5 (FVX.X) and 10-year (TNX.X) maturities. Fair Value for the S&P 500 today is $7.33 with buy programs set at $9.12 and sell programs set at $5.76.

Employment numbers stronger than expected

Today's non-farm payroll number came in at 268,000 and that is much higher than Wall Streets consensus of 78,000. The jobless rate of 4.2% was very close to the consensus estimate for 4.1%.

It's not what they did, what they said they are going to do

Last Thursday I profiled shares of Input/Output (NYSE:IO) as a potential bullish play for traders near $11.75 and the stock set idle for much of the week. Then yesterday morning, the company reported earnings that missed Wall Street's estimates. After reporting its earnings, the company said it sees flat sales for the first quarter of 2001 even as it see full-year sales up as much as 40% on increased budgets for land exploration equipment. "IO should benefit from increased sales ... caused by expanding exploration budgets," said Tim Porbert, president and chief executive officer. Yesterday, shares of IO surged late in the day to close at $12.98.

Be alert at the open!

The last couple of days, we've seen bond yields move sharply lower as market participants gobbled up treasuries. This was money that could have gone into stocks, but chose to buy bonds instead. This morning we're starting to see both the 5 and 10- year bond yield rise (selling in these two bonds), but the 30- year is hanging around the break-even level. My preliminary guess would have me on alert for a potential upside move in equities, but I'd want to see a continued move higher in bond yields before getting too bullish, especially on technology stocks.

Jeff Bailey
Staff Analyst

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