Posted on September - 03 - 2010
Slower Than Expected Job Losses May Bring About Relief Rally – RTTNews Daily Market Analysis
() - The major U.S. index futures are pointing to a higher opening on Friday, with sentiment improving notably following the release of a report, which showed smaller than expected job losses for August. On a more upbeat note, the private sector added more jobs than economists had forecast. The initial euphoria may lift stocks sharply higher in early trading, although sustenance of the gains largely hinge on the results of the service sector survey of the Institute for Supply Management. That said, violation of key technical resistances could lead to further upside despite recent gains.
U.S. stocks closed Thursday’s session higher, extending their gains from the previous session after a housing report encouraged market participants. The major averages opened higher, with the Dow Industrials seeing a considerable degree of volatility as the negative sentiment generated by nervousness about the national non-farm payroll employment report was offset by the encouragement derived from a decline in jobless claims, an increase in pending home sales and fairly positive retail sales.
The Dow moved decisively into positive territory in the afternoon, closing up 50.63 points or 0.49% at 10,320. The Nasdaq Composite and the S&P 500 Index saw a tentative open but moved higher in early trading and showed sideways in the remainder of morning trading. The two averages legged up further for the afternoon, with the Nasdaq Composite ending 23.17 points or 1.06% higher at 2,200 and the S&P 500 Index rising 9.81 points or 0.91% to end at 1,090.
Twenty-four of the thirty Dow components closed the session higher, with Wal-Mart (WMT), 3M Co. (MMM), JP Morgan Chase (JPM), Hewlett-Packard (HPQ), Home Depot (HD), Disney (DIS), Cisco Systems (CSCO), Boeing (BA) and Alcoa (AA) among the notable gainers.
Among the sector indexes, the NYSE Arca Biotechnology Index gained 1.69%, the S&P Retail Index rose 2.19%, the Philadelphia Housing Sector Index advanced 1.97%, the Philadelphia Semiconductor Index rallied 2.07% and the NYSE Arca Disk Drive Index moved up 2.44%.
On the economic front, the Labor Department released a pair of economic reports yesterday. The jobless claims report showed a decline in first time claims for unemployment benefits to 472,000 in the week ended August 28th from an upwardly revised reading of 478,000 for the previous week. The four-week average fell slightly to 486,000 and continuing claims for the week ended August 21st declined 23,000 to 4.46 million.
The Labor Department also downwardly revised its reading on second quarter non-farm productivity to show a decline of 1.8% compared to the initially estimated 0.9% drop. However, unit labor costs were upwardly revised to show 1.1% growth from a 0.2% increase estimated earlier. The softness in productivity reflects the inability of employers to squeeze more output from their existing workforce.
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