The stock market stumbled around this morning as investors digested the October non-farm payrolls jobs report. The official unemployment rate rose to 10.2%, which is the highest level since 1983. The government also said that inventory levels continue to fall. President Obama signed a new $24 billion stimulus bill that extends the new homebuyer tax credit and extends unemployment benefits again. Commodities were mixed. Gold futures temporarily hit $1,100 an ounce intraday. Yet oil futures were down sharply, -3.5% to $76.78 a barrel, on the unemployment news. Out of work consumers drive less suggesting oil demand will remain sluggish.
Asian markets were bouncing. The Japanese NIKKEI index rose 0.7% but the index still lost ground for the week. The Japanese market is off almost 5% in the last two weeks. The Chinese Shanghai index is still in rally mode. Today's 0.2% gain pushed the Shanghai to a three-month high. The Hong Kong Hang Seng rose 1.6%.
Gains were limited in Europe. Miners were strong on the rise on gold but oil stocks were down on the drop in crude oil futures. Financials managed a bounce. The English FTSE posted a 0.33% gain. The German DAX inched up 0.13%. The French CAC-40 closed almost unchanged at -0.04%.
This morning the Labor Department released the October non-farm payroll report. Unemployment hit a 26 1/2-year high, surging past economist's estimates for a small rise from 9.8% to 9.9% and jumping to 10.2% in October. Most expect this trend to continue, which casts a lot of doubt and uncertainty over the strength of the recovery. Real unemployment is a lot higher. The "under employment" rate, which includes those who are working part-time just to pay the bills but would rather work full time, rose to 17.5%.
Economists were expecting October job losses to come in at 175,000. This morning's report put job losses at 190,000. While it was worse than expected it's still the lowest rate of job losses since August 2008. The Labor Department revised August and September job losses lower. Thus far the U.S. economy has lost 7.3 million jobs in the current recession with 3.49 million lost in the Obama administration. Analysts are also concerned about the average workweek. This morning's report listed hours worked at a record low of 33 hours a week. We need to see hours worked rising. Managers are going to give current employees more hours and probably overtime before they hire new people.
Wholesale inventory levels continue to fall. The government said wholesale inventories fell for the record-breaking 13th month in a row with a 0.9% drop in September. This beats the previous record of nine months in a row from 2001 and is currently the longest streak of declining inventories since records began back in 1992. The idea here is that eventually businesses will need to restock the shelves and the burst in manufacturing to increase inventory will create a big boost to GDP. Yesterday the same-store sales data from retailers was positive. If sales are rising and inventories are falling it would suggest we are getting closer and closer to the long awaited inventory build out phase.
Overall stocks are mostly higher but the bulls are struggling to hold on to gains. AMZN, GE, TRV and XL were all upgraded this morning, which certainly didn't hurt trader sentiment this morning. At the moment the S&P 500 is skimming positive territory with a minor gain. The NASDAQ, the Dow Industrials, and the transport sector are trying to hold on to positive gains. The Russell 2000 and the SOX semiconductor index have turned negative.
Let's take a quick look at charts for the major averages:
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
Chart of the U.S. dollar ETF (UUP):
After a quick look at the OptionInvestor.com play list I'm not seeing a lot of movement. The GLD hit a new all-time high but it's trimming its gains. ISRG almost hit our stop loss at $261.00 this morning but it's reversing lower. It may be time to give up on LIFE. The stock is testing resistance near $50.00 and could be poised to breakout higher.