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Market Update by Mark Glassman (Author Archive)
Futures Climb Ahead of Jobs Data
News at a Glance
- Stress-Free: Test results give banks, traders closure.
- Rebound Coming: Futures rise after Thursday selloff.
- No Deal: April worst month for M&A since 2004.
- Labor Update: April jobs report due out at 8:30 a.m.
The Lowdown
A day after an ugly session for stocks, a rebound is on the horizon.
The major indexes aimed to open higher Friday ahead of the latest jobs report and after the government's stress tests of financial firms gave traders some closure on the banking system.
Traders appeared to sigh collectively after a report from the Federal Reserve showed that ten of the nation's top 19 financial institutions must raise their capital levels by a cumulative sum of $74.6 billion to adequately prepare themselves for another downward swing.
Still, traders are treading carefully before the release of the April jobs report. Economists expect the unemployment rate to have risen to close to 9% last month, however payroll losses are expected to have slowed substantially, indicating a stabilization of the labor market.
Earlier this week, Federal Reserve Chairman Ben Bernanke said the economy should begin to grow again before the end of the year but warned that labor market would continue to get worse before it got better.
In corporate news, deals came to a near standstill last month. Deal volume fell to $113.4 billion in April, the lowest monthly total since September 2004, according to Thomson Reuters data.
World markets were mostly higher. In Asia, Japan's Nikkei ended up 0.5%, while Hong Kong's Hang Seng finished up 1.0%. In Europe, the U.K.'s FTSE picked up 1.4% in midday trading.
On the Nymex, crude continued its steady climb, trading up $1.01 at $57.72 a barrel.
Corporate News
- American Express (AXP) is seeking permission to repay the government $3.4 billion in bailout funds handed over as part of the Troubled Asset Relief Program. The decision comes after the Federal Reserve said the firm has "no capital need."
- Toyota (TM), recently anointed the world's largest automaker, predicted an annual loss of $8.6 billion, as a sharp decline in sales weighed on guidance. The firm also said it expects global sales to drop 14% during the current fiscal year.
- AIG (AIG) recorded its sixth straight quarter in the red, however, in a sign that conditions may be improving, the insurer's loss narrowed to $4.4 billion, 44% below that of the year-ago period.
The Economy
- The April jobs report is scheduled to be released at 8:30 a.m. by the Labor Department. In March, the economy lost 663,000 jobs, the unemployment rate rose to 8.5%, the average hourly workweek stood at 33.2 hours, and hourly earnings rose by 0.2%. For April, economists expect a 600,000-job drop in payrolls, an unemployment rate of 8.9%, an hourly wage boost of 0.2% and an average workweek holding steady at 33.2 hours.
- The March report on wholesale inventories, a measure of lag in demand relative to expectations, is scheduled to be released at 10 a.m. by the Commerce Department. In February, inventories slipped 1.5%. For March, economists expect a 1.0% decline.
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