Nervous Investors Await Jobless Report

OCTOBER 07, 2010
Michael A. Doran
There is an increasing probability of slower growth for the overall economy into first quarter of next year. The recovery so far is like a plane, unable to get much lift and teetering along to stay in the air. Any unexpected and/or worsening economic factor could bring the economic engine to the ground and reverse the minimal recovery in place.

Friday’s unemployment numbers are being watched closely and unless surprising strength in the labor market emerges, it could bring the stock market back from last month’s run.

Stocks were generally weak Thursday. Their slide comes in response to the greenback's gain. The major stock-market averages opened in positive territory, but were quickly sent lower as participants responded negatively to the greenback's rebound.

The dollar had been down as much as 0.6% as the euro advanced to a new multi-month high and the yen extended to a new 15-year high. The dollar has since swung to a 0.3% gain against competing currencies.

Typically a widely watched event, weekly jobless claims came with little surprise. Initial claims for the week ended October 2 totaled 445,000, which is only modestly below the 455,000 claims that had been widely expected. At 4.46 million, continuing claims were also close to the consensus.

Market participants have generally been uninspired by the latest round of same-store sales results from retailers. Numbers for September were generally better than expected, but shares in the group are still down 0.5%. PepsiCo Inc. (NYSE: PEP) and Immucor Inc. (NASDAQ: BLUD) both posted in-line earnings for the latest quarter, but PepsiCo trimmed the top end of its growth outlook and Immucor issued downside guidance. Marriott International Inc. (NYSE: MAR) reported a miss, but issued an in-line forecast. The announcements have done little to build up expectations for Dow component Alcoa Inc. (NYSE: AA), which unofficially kicks off earnings season with its report after the close of trading Thursday. In contrast to the prior session, large-cap technology stocks have helped the Nasdaq Composite Index limit its loss.

Still, the market hasn't been able to completely fend off sellers. Pressure has become broad-based, such that all 10 major sectors in the broader market are in the red. Outside of tech, only defensive-oriented healthcare and utilities stocks have limited losses. The three sectors are down 0.3%, 0.2%, and 0.1%, respectively.

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