Dow 13,038 (-1.27%) S&P 1,369 (-1.61%)
With May beginning, the key eye-candy headline all week demanding investors’ un-divided attention has been Friday’s official US government employment report for April. And today’s announcement had more in common with a Kanye West appearance than anything else – there was a lot of anticipation and noise, but in the end, it just bothered people. The Labor Department’s disappointing report dominated stocks and triggered a market sell-off – The tech-heavy Nasdaq stock index suffered its worst single-day loss since November and the Dow free-fell 168 points.
US adds 115,000 jobs in April, unemployment dips to 8.1%
The Dow was down by over 100 points within a half-hour of the market open following the Labor Department report that only 115,000 non-farm jobs were added to the economy last month, well below the 160,000 expected and the (revised) 154,000 added in March. This was the smallest gain in six months and discouraged investors that the recent advances averaging 200,000 jobs a month since the year began are slowing. The official April unemployment rate did unexpectedly tick down to a 3-year low of 8.1% from 8.2%, but this is mostly a result of 342,000 people throwing in the towel and exiting the workforce at a growing rate. Analysts are focusing on the participation rate, the number of people either with a job or “actively looking for a job”, which is at its lowest point in over 30 years due to this exodus.
Oil prices drop as economic outlook darkens
April’s lackluster jobs growth sent oil futures prices tumbling down over $4 dollars today to settle below $100/barrel for the first time since February. Oil prices have spiked since December as tensions in the middle east put the future supply of the commodity oil in question while a strong American economy was humming along. Prices peaked at over $106 on May 1st after the positive data report on US manufacturing. High prices had Texas oil men licking their chops and incentivized them to pump out as much oil as they could since it was so valuable, which has increased oil reserves to the highest level in years. Traders realized the perfect storm was brewing on the horizon – the combination of easing tensions in Iran, a major buildup of oil reserves in the US, and a poor economic outlook will increase oil supply relative to demand, and prices should drop. This alarming realization sent oil futures traders running to their Bloomberg terminals to sell their oil contracts and the price fell to $98.49/barrel.
“Week in Review”
After impressive corporate earnings last week helped finish April with a slight gain for the 7th-straight month, the impact of today’s unemployment report capped off a more difficult market week – the S&P 500 stock index experienced its worst of 2012 so far and the Dow slid 1.4% over the past five trading sessions. Earlier this week, Tuesday‘s surprisingly solid news that US manufacturing expanded to its highest point all year had markets up to their highest levels since 2007. But there was a noticeable vacuum of investor enthusiasm since Wednesday after a preliminary reading by the payroll-tracking company ADP on today’s jobs report soured investors’ expectations. In corporate news, Facebook (FB) announced the share prices for its initial public offering that will value the company at a whopping $96 billion, while Chesapeake Oil (CHK) and Green Mountain Coffee (GMCR) fell big on poor corporate earnings. After the jobs bombshell dropped at 8:30 AM, barring a mood-swinging Coors light party spontaneously spawning on the NYSE trading floor, the markets were headed into the weekend on a three-day skid.
- Weekend elections in France and Greece could turn the direction of the European Debt Crisis dealings. French Socialist candidate and Socialist parties in Greece could upset the established order…this could be a major escalation in the anti-austerity movement that has begun in Europe.
- The Madison Square Garden Company (MSG) announced that its Jan – March quarterly profits rose 37% on the lagging spirit of Linsanity that remains only on MSG earnings reports and in your bandwagon buddy’s closet who was cool for one week with his #17 Knicks jersey…Will the Rangers success on the ice drive enough playoff ticket revenues for the company to overcome the utter Knicks apocalypse, who are just one loss away from an early playoff exit?
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