Jobs data heightens concerns about economic slowing, sending stocks lower once again. After a sharp drop on Thursday, the major market indices are continuing their bearish ways. Oil prices do continue to decline, but this isn’t enough to convince traders to buy stocks. Bearish news from Nokia (NOK) has also added to the selling atmosphere. Despite all this bad news, the bulls might see some positive in the fact stocks haven’t fallen further this morning.

The employment report has been the focus this morning and there it is hard to find any positives in the data. Nonfarm payrolls fell for the eighth straight month with 84,000 jobs lost in August. This wasn’t even the worst news with the unemployment rate spiking to 6.1 percent, a gain of 4-tenths. Payroll declines in June and July were also revised lower by nearly 60,000. As if the payrolls numbers weren’t enough, average hourly earnings came in higher than expected with a gain of 0.4 percent. The concern is that a continuing weakening in the jobs market will hurt economic growth going forward and that a recession is still a distinct possibility.

Shares of Nokia are down more than 10 percent after the handset maker lowered its market share forecast. Initially, NOK expected market share to stay even with the second quarter, but because the company didn’t match aggressive pricing of competitors, its market share shrunk. NOK shares have moved to a new 52-week low near $20.

The financial sector got more bad news today when Merrill Lynch (MER) was cut to a “Sell” at Goldman Sachs. Goldman feels that Merrill is likely to announce fresh write-downs on top of the $40 billion it has already written down. Goldman feels that Merrill still trades at too high of a price to book multiple. MER shares are down more than one percent to a price below $26.

One positive bit of news has been merger news between Altria (MO) and UST (UST). MO is in advanced talks to buy the smokeless tobacco maker for more than $10 million. This news has sent UST shares higher by nearly 25 percent at a price near $67. SanDisk (SNDK) shares are also moving sharply higher on reports Samsung is interested in purchasing the flash-memory maker.

With the outlook for the economy fading, it might be difficult for the bulls to gain much strength heading into the weekend. It will be interesting to see what Fed leaders have to say about the jobs data and the economy in general and how what they feel needs to be done to keep the economy out of a recession. Maybe it will lead to another stimulus package, which kept the economy out of  a recession in the second quarter. 

Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site