Intraday Market Update
The highly anticipated May US employment report was a huge disappointment this morning as U.S. non-farm payrolls expanded by a seasonally adjusted 431,000 in May, but virtually all of the new jobs were temporary jobs at the US Census, leaving private-sector hiring very weak and underwhelming. Consensus estimates called for 540,000 new jobs and many analysts even increased their estimates earlier in the week, including Goldman Sachs. They were obviously wrong. The employment report was setting up to be a catalyst to move the market through overhead resistance but that has failed so we must now adjust and take what the market gives us.
Adding to the risk aversion are fresh worries out of Europe. Comments from the new government in Hungary indicate that their willingness to default is a real possibility after saying they will not implement austerity measures. The rumors sent the euro tumbling -1.25% to fresh four year lows below 1.20.
The S&P 500 is down -30 points to 1073 and is still holding on to a key support level near 1,070, for now. If the index breaks below this level it will likely test recent lows near 1,040 from February and May. Some might argue this would create a triple bottom but the astute technical analysts would say there is no such thing as a triple bottom. As such, I would be surprised if that level holds very long if in fact we get there.
There is a bit of good news to report about the oil spill in the Gulf. After successfully cutting the riser pipe away from the well head yesterday BP engineers successfully attached the containment cap (or top hat device) to the well head this morning. BP has stated that it will take up to two days in order to complete the capping operation and believes the containment cap could allow them to capture up to 90% of the hydrocarbons leaking from the well. BP stated on an investor conference call this morning that future decisions on the dividend will be made by the board and also confirmed that it has spent over $1 billion in dealing with the spill so far. The company's CEO, Tony Hayward, warned that the long term costs of the disaster would be severe and spread out over many years. Shares of BP are down -4% while Transocean (RIG) and Halliburton (HAL), who are also involved in the disaster, are down about -1%. If BP contains the oil spill this weekend I suspect it may spark a bounce in equities early next week which probably sets things up for a good shorting opportunity.
In other equities, Goldman Sachs has gained about +1% after reports have surfaced that the firm may announce a settlement deal with the SEC, but GS has until mid-June to respond to the charges. Retailers Quicksilver and Blyth are making moves after their earnings reports. Quicksilver beat earnings expectations in its Q2 report yesterday and shares of ZQK are up +5%. Blyth cut its FY11 outlook citing the impact of the deteriorating euro and weak US consumer spending. BTH is down -20%. Krispy Kreme Doughnuts (KKD) is +10% after a good earnings report and offering optimistic commentary about 2011.
Commodities are mixed with Natural Gas surging another +5.00% higher after yesterday's big move. Gold is also hanging tough and is positive by +0.78%. However, front month crude has retraced some of its recent gains and is down -3.50%. Silver is off by -3% and copper is getting crushed again, down -4.24%.
Markets in the Asia-Pacific region were relatively flat with the exception of Australia which was down -0.82%. European markets sold off late in the day after the US employment report. Notable losers include France (-2.86%), Germany (-1.91%), Spain (-3.89%), and Italy (-3.79%). Shares in London were off by -1.63%.
Core Sector List:
Overall reading: 16 sectors declining, 0 sectors advancing.
Strongest Sectors: None
Weakest Sectors: Transportation, Semiconductors, Home Construction
S&P 500 - Daily and 30-minute Intraday Charts:
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