The global sell-off continues as investors run for the weekend hoping to forget about market losses for a few hours during the Superbowl on Sunday. The official jobs report data this morning was disappointing but the loss in jobs was softened by a downtick in the unemployment rate, which fell to a five-month low. With global markets in turmoil money is seeking safety in the dollar, which is pushing commodities lower. Crude oil is down another 3.1% on top of yesterday's 4.5% loss. The price oil is now floating near $71 a barrel. Gold futures are down nearly $9 following yesterday's 4% decline with gold now trading near $1,054 an ounce. Copper continues to plunge with copper prices off more than 18% from their January highs.
Asian markets are accelerating lower with big declines on Friday. A news story in the official China Securities Journal is suggesting that the Chinese government has told banks to "control lending" (a.k.a. lend less) in February. The Chinese Shanghai index fell 1.87% and the Hong Kong Hang Seng plunged 3.3%. The Shanghai is off 10% from its January high and the Hang Seng is down almost 12% from its January high. Meanwhile Toyota Motors made headlines in Japan when Akio Toyoda, grandson to the founder of Toyota and current president of the company, came out and issued an apology over the recall for sticking gas pedals. Shares of Toyota are bouncing (+3.5% with a move toward $75) in spite of increasing concerns over a software glitch in the hybrid Prius, which produces a delay before the brakes kick on. A rising yen is putting pressure on the Japanese exporters and the NIKKEI lost 2.89% on Friday. The NIKKEI is off about 6.2% from its January high.
The correction continues in European markets with most of the major markets down three days in a row. Investors remain focused on Greece, Portugal, Spain, Ireland, and Italy, these are the countries with the greatest risk of a debt default. Greek banks fell another 3% today. The French CAC-40 index lost 3.4%. The German DAX gave up 1.79% on Friday and is down 10% from its January high. The English FTSE fell 1.5% on Friday pushing its January correction to -8.6%.
In the U.S. the headlines were dominated by the January non-farm payrolls report. The Labor Department said the U.S. lost 20,000 jobs in January. This is worse than expected but how much worse depends on who you were listening two with most of the estimates coming in at -5,000 to +15,000 jobs. December's -85,000 jobs was revised lower to -150,000. The Labor Department also revised their total job losses for 2009 by another 1.4 million jobs pushing the total number of jobs lost for this recession to 8.4 million.
There seemed to be some confusion over a new job losses (-20,000 in January and an extra -65,000 in December) and the unemployment rate ticking lower. Economists were expecting the unemployment rate to increase from 10.0% to 10.1%. Instead the rate decreased to 9.7%, the lowest level since August. The only explanation was a possible change in the number of people in the workforce or the number of workers falling off the rolls to be counted. The under-employment rate, which counts those people working part-time when they really want full-time work and those workers who have actually given up looking for work, declined from 17.3% to 16.5% in January.
The jobs report wasn't all bad. The manufacturing industry actually hired 11,000 people. That was the first time this sector hired workers in three years. Plus, the +0.2% gains in both hours worked and earnings is a positive sign that employers are one step closer to hiring people again since businesses tend to work their current employees more before hiring new workers.
Currently the S&P 500 is off 0.6% and trading near its lows for the session around 1055. I have been suggesting that the S&P 500 might find support in the 1050-1035 zone, which would be close to a 10% correction from its highs. Although I am hearing more analysts suggest the S&P 500 will fall toward 1,000 first before bouncing. The NASDAQ's intraday bounce has rolled over with the NASDAQ now down 0.5% near 2113. The Dow Industrials have broken round-number, psychological support at the 10,000 level.
If you are a football fan I hope you enjoy the Superbowl this weekend. I'll be watching the Superbowl ads. There are ten new advertisers this year. The average commercial costs $3 million per 30-second spot with many companies spending around $1 million just to produce the commercial (source: CNBC). There will be an estimated 100 million people tuning in to watch the game.
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
Scanning the OptionInvestor.com play list I see that TEVA, which was showing relative strength yesterday has reversed on us. The Volatility index (VIX) has broken out above its 200-dma with a 3.4% gain. AAPL and GYMB are showing some relative strength with a minor gain. Shares of INFY have hit our target to take profits near $50.00. Siemens (SI) has now broken technical support at its 200-dma.