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June jobless rate grows to 5.9%

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The Labor Department reported that the unemployment rate rose one-tenth of a percent to 5.9% in June as business added just 36,000 workers to their payrolls. There was little change in employment in most major sectors. The unemployment number was a bit of a disappointment. While economists were looking for a 5.9% unemployment rate, the reported 36,000 nonfarm payrolls was less than the 68,000 forecasted.

Total hours worked in the economy rose about 0.3% in the month, as firms squeezed more work from current employees, instead of adding to payrolls. Average hourly wages rose 0.4% to $14.76. Wages are up 3.3% in the past year.

Stock futures give back gains, but still higher

Stock futures were at their best levels of the session prior to this morning's unemployment data, but have given back some of their gains. Still, stock futures show a higher open for stocks on partial relief that there were not any terrorist attacks on America's July 4th Independence Day celebration. S&P futures trade up 11.80 points to 965.00. NASDAQ futures are higher by 28 points at 1,026 and Dow futures are up 83 points at 9,130.

Fair value for the S&P 500 today is $1.25. That price will not change during the session. HL Camp & Company has their computers set for program buying at $2.10 and set for program selling at $-1.12. Fair value for the NASDAQ-100 today is $4.20.

Treasuries are seeing some selling at their open with the benchmark 10-year YIELD ($TNX.X) jumping to our 50% retracement level of 4.801%. Right now, this has me thinking that short-term bulls that held some positions over the weekend may be quick sellers of stocks at the open, especially on those stocks that may gap higher by more than 5-7%.

Qwest denies Wall Street Journal report

The Wall Street Journal is reporting that the Justice Department has launched a criminal investigation into Qwest Communications (NYSE:Q) $1.70, which is already facing a regulatory probe into its accounting practices. The article speculates that a possible issue for Qwest (Q) is whether it properly recorded revenue, as the company was one of the most aggressive users of "swap" transactions, which boosted Qwest's revenue by more than $1 billion in 2001.

Qwest denies that it faces a Justice Department investigation, as reported in the Wall Street Journal, saying, "We have no reason to believe that we are the subject of any investigation by the U.S. Department of Justice. It's outrageous that we would learn about such an investigation through the media. We have disclosed everything asked of us and have cooperated fully with the SEC and Congress."

Shares of Qwest (Q) traded down 20-cents (-34%) at $1.50 over Instinet in pre-market action.

Jeff Bailey
Senior Market Technician
Option Investor

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