Stocks are indicated modestly higher Friday morning after the Labor Department's latest monthly payroll report showed the economy losing more jobs in January, but perhaps not as many as some market watchers had feared. Less than an hour before the opening bell on Wall Street, stock index futures indicate that the Dow Jones Industrial Average might add 40 or 50 points early trading.
The US economy lost another 598,000 jobs during the month of January, according to the latest statistics from the Labor Department. The decline in payrolls follows a similar loss the month before, which was revised down to show a decline of 577,000 (down from the initial 524,000 reported). The January number was also worse than economist estimates, which called for a decline of 540,000.
Meanwhile, the unemployment rate rose to 7.6 percent from 7.2 percent, which was also worse than economist estimates of 7.5 percent. Average hourly earnings rose .3 percent and the average workweek was 33.3 hours. Economists had expected earning to increase .2 percent and a 33.3 average workweek.
Stock index futures were modestly higher ahead of the news and are now seeing a modest extension of those early gains. Since bad news was "baked into the cake", the initial reaction to the latest round of bad jobs data seems to be relief. It could have been worse.
Bonds are trading lower. The benchmark ten-year Treasury gave back early gains and is slipping a few ticks. It now yields 2.93 percent, compared to 2.91 percent ahead of the jobs data.
The dollar is up .47 to 91.72 on the yen and the euro gave back early gains to slip back below 1.28 on the buck.
Crude oil prices are down, but gold is a bit higher. Crude lost $1.67 to $39.50 a barrel. Gold edged up $4.8 to $919 an ounce.
Among the stocks to watch, News Corp (NWSA) shares fell in overseas trading after the company reported a $6.4 billion loss and warned of a 30 percent drop in profits this year. Hartford Financial (HIG) reported an $806 million loss and said it was cutting its dividend. Biogen (BIIB) is lower after posting in-line earnings for the most recent quarter.
Dryships (DRYS) and the other drybulk shippers could see early gains on news the Dry Bulk Freight Index rose 10 percent to three-month highs.
Gern (GERN) and some of the other stem-cell names are also higher after the Washington Post reported that President Obama "guarantees" to overturn Bush's stem cell research policy.
In the options market, volume picked up a bit and sentiment seemed to shift a little more bullish, after the Dow Jones Industrial Average rallied 106 points and the NASDAQ gained 31 Thursday. The CBOE Volatility Index (.VIX) finished down .29 to 43.56 and approximately 7.8 million calls and 6.2 million puts traded on the day.
A number of banks, including BofA (BAC), Wells Fargo (WFC), and BB&T (BBT), saw heavy put buying early, but the group found a floor in morning action and bounced higher in afternoon trading. BAC closed up 14 cents to $4.84 and 28.4 percent above the worst levels of the day. The surge of put buying early might have been a sign of short-term capitulation in some of the battered banking names.
Some of the agricultural stocks saw increasing options activity after Bunge (BG) rallied $6.48 to $49.07 on earnings news. Total options volume in Bunge jumped to 3 times the usual, with 7,400 puts and 8,200 calls traded. Mosaic (MOS) and Potash (POT) also saw strong share price gains on increasing options activity Thursday.
Bullish trading was also seen in Sun Microsystems (JAVA), Teva Pharmaceuticals (TEVA), and Focus Media (FMCN).
Iron Mountain (IRM) was the subject of a massive put spread, where the investor bought 27,000 July 20 puts and sold 27,000 July 12.5 puts. Deep out-of-the-money puts on the Dow Jones Industrial Index (.DJX) were active for a second day. Bearish trading also surfaced in The Limited (LTD), Sunoco (SUN), JC Penney (JCP), and Capital One (COF).
Frederic Ruffy
WhatsTrading.com
