Taking Stock of Wall Street 2008-09-04
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Who Won Today - the Bull or the Bear?
Right from the start market was plagued by mixed, if not discouraging, economic data. And it ended with the largest single-day drop in two months.The jobless data showed weekly claims go higher by 15,000 to 444,000, higher than the 420,000 expected. The four-week moving average was down to 438,000 from 441,250. Continuing claims also increased by a lesser degree from 3.429 mln to 3.435 mln.
The ADP report showed the loss of 33,000 private payrolls during August - 3,000 more than expected and suggesting softer employment conditions.
Both make it probable that tomorrow's monthly employment data can be negative even though it may beat analysts' expectations.
Bleak labor data also mean easing of inflationary pressure. Second quarter labor costs were 0.5% lower and productivity increased to 4.3% . Year-over-year productivity is up 3.4%. Unit labor costs are up 0.6% for the same period.
The ISM Service Index for August was 50.6 against an expected 49.5, raising faint hopes of growth expansion.
That rise in year over year productivity of 3.4% was the fastest annual increase in four years; may significantly reduce wage growth's contribution to inflation.
Monster's Employment Index reversed from 157 to 159. But on an yearly basis, it is still down by 14% from a year ago.
Petroleum inventories were not very encouraging: Crude oil reserve was short by 1.9 mln barrels against a forecast surplus of 100,000. Gasoline went down 1mln against 1.3 mln shortfall predicted. Distillates too were down by 400,000 barrels versus the predicted surplus of 500,000. At the same time natural gas reserves went up by by 90bln bcf to 2,847 bcf as expected.
Oil was up early, but fell as much as 2.6% settling 1.5% lower at $107.90, as dollar strengthened. Gold retreated by 0.76% to 796.60
30-year fixed mortgages fell from 6.60% to 6.55%.
The sole winner today was the greenback. The dollar went up 0.7% against a basket of external currencies. The buck buoyed up on fears of slowing global economies. It was one of dollar's stellar performances (2.5%) during the year.