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Little economic news has focus on company news

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After being bombarded with economic data in the middle of last week and some industrial data yesterday, there was little economic data for traders to focus on today other than Challenger, Gray & Christmas' report that showed the pace of layoffs, while still rather high, fell 11% in November.

U.S. corporations announced 157,508 job reductions in November, 11% less than October's 176,010 and 13% less than in October 2001, according to a monthly tally compiled by outplacement firm Challenger, Gray & Christmas.

November's tally was the third highest of the year and is nearly double the 80,966 recorded in August.

John Challenger, CEO of the outplacement company said, "None of this bodes well for the U.S. economy, particularly since we are in the Christmas selling season." Many consumers will cut back on their spending because they fear for their jobs, he added.

The planned cuts were deepest in the high-technology sectors, such as telecommunications and 0computers, which together accounted for more than 34% of the monthly cuts.

The computer industry cut about 25,000 jobs in November and has eliminated 290,000 jobs since January 2001.

Among the largest announcements in November, airline/defense contractor Boeing (NYSE:BA) $34.25 +0.49% cut 5,000 jobs, office equipment manufacturer Xerox (NYSE:XRX) $8.27 -3.72% erased 2,400 jobs, while chip-maker Advanced Micro Devices (NYSE:AMD) $8.28 -7.27% severed 2,000 employees.

Telecom, which announced 16,909 cuts in November, has sliced more than 250,000 jobs this year and nearly 550,000 in the past 23 months.

So far in 2001, a total of 1.34 million job cuts have been announced, which is down 25% from last year's pace. In all of 2001, 1.96 million jobs were cut.

More than 400,000 cuts have been announced in the past three months.

The Challenger survey tracks corporate announcements, not actual job reductions, which may take place immediately or over a period of months. The reductions can be accomplished through layoffs, voluntary departures or retirements.

In November, initial jobless claims for state unemployment benefits, a direct measure of job losses, dropped to three-month lows. Continuing claims, which reflect hiring trends, have not fallen.

On Thursday, economists' look for the Labor Department to report weekly jobless claims of 374,000. Then on Friday, the Labor Department will report November's unemployment rate. Economists expect the jobless rate to rise to 5.8% in November, up from 5.7% in October.

The continuing high level of layoffs noted by Challenger's survey "contradicts the message from the jobless claims numbers, which are now clearly on a downward trend," said Ian Shepherdson, chief U.S. economist at High Frequency Economics. "We'll be watching the next few weeks' claims data very closely indeed."

Shares of Ford Motor (NYSE:F) $10.23 -10.74% fell sharply in the past hour as the big 3 automakers begin to report their November unit sales number. While Ford reported a 16.6% decline on a year-over-year basis, which was better than the -18% decline that industry analysts expected, the company's announcement that it would cut back on production and forecasted 2002 EPS would fall short of analyst's estimates, hints to some that Ford doesn't see a pickup in its business near-term.

While General Motors (NYSE:GM) $38.41 -3.8% and Daimler/Chrysler (NYSE:DCX) $34.60 -2.72% have not yet reported their November unit sales, Ford's news and price action has had a negative impact on GM and DCX. Other automakers outside the "Big 3" have Nissan Motor (NASDAQ:NSANY) $15.67 -1.74%, Toyota Motor (NYSE:TM) $52.29 -0.34% and Honda Motor (NYSE:HMC) $18.66 -1.73% edging lower.

Current sector action is broadly negative with the bulk of the sectors we follow on a daily basis showing losses. Recent technology leaders have the Wireless Index (YLS.X) 60.76 -4.72% and CBOE Internet Index (INX.X) 107.60 -6.64% losing some steam and has the tech-heavy NASDAQ-100 Index (NDX.X) 1,097 -2.06% leading the major market index's declines.

The broader S&P 500 Index (SPX.X) 924 -1.12% briefly violated an upward trend taken from its October 9th relative low close, when it traded below the 920 level at 918.73, but has recovered marginally from its lows.

Volume is rather light with the NYSE just now turning 880 million shares, while the NASDAQ has just breached the 1 billion shares traded level.

Breadth is in favor of the bears with NYSE decliner outnumbering advancers by a 5 to 3 margin, while NASDAQ breadth is negative at 7 to 3. The new highs versus new lows category remains positive at both the NYSE with 29 stocks hitting new highs versus 12 new lows on the big board, while NASDAQ shows 44 stocks trading new highs versus 19 stocks at new 52-week lows.

Jeff Bailey

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