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Jobless claims higher than expected

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First-time claims for unemployment benefit rose by 17,000 to 426,000 in the week ending September 7, which was higher then economist's forecast of 400,000 and the highest weekly jobless number since April 20. Economists will note that figures released for the Labor Day week tend to be more volatile as employers tend to not hire workers during that 4-day workweek.

However, the 4-week average for continuing claims for state unemployment benefits, which smoothes out the weekly volatility, rose by 12,000 to 3.54 million after the latest week's continuing claims for unemployment rose by 38,000 to 3.57 million, the highest since July. These figures do not include some 1.1 million workers receiving extended federal benefits.

In a separate report, the Labor Department said import prices rose 0.3% and export prices rose 0.1% in August. Imported petroleum prices 2.1% while imported capital goods prices rose 0.2%, the first increase in 16 months. Excluding petroleum, import prices would have risen just 0.1%. On the export side, agricultural prices jumped 1.9%. Excluding this variable, export prices would have been unchanged.

In the last 12 months, import prices are down 1.3%, despite increases in five of the past six months. The U.S. Dollar has weakened considerably during this 12 month period, which many economists thought would have increased import prices. At the same time, U.S. exporters can raise prices without losing competitiveness.

Stock futures dipped lower after the release of jobless claims as traders point to the rising numbers as evidence to weak hiring and further layoffs coming this year, as companies strive to slash costs to the bone amid spotty demand from consumers and businesses.

S&P futures (sp02u) currently trade down 4 points at 902, NASDAQ futures are off 8 points at 935 and Dow futures are lower by 52 points at 8,500.

Fair value for the S&P 500 today is $1.75. That price will not change during the session. HL Camp & Company has their computers set for program buying at $3.02 and set for program selling at $-0.52. Fair value for the NASDAQ-100 today is $0.93. These prices are based on December futures contracts, which become top step today.

Traders will note that next Friday is September Triple-Witching when stock options, index options and futures expire, thus the rolling to December futures.

Is attack on Iraq imminent?

Market talk this morning is that Prime Minister Blair is planning to recall parliament for a special session on Iraq next week (talk is Tuesday). Some are thinking that the recall means action is imminent.

In other European news, the European Central Bank (ECB) left rates unchanged at 3.25%. This was expected.

Jeff Bailey
Senior Market Technician
Option Investor


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