David Moenning�s Daily State of the Markets: 11/04
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It's All Good
After a flurry of economic data yesterday morning, the word on the floor seemed to be, �It�s all good.� The positive reports on the state of the economy added fuel to the bull�s fire and helped push the indices to their fourth gain in the last five days. While things got a little shaky in the afternoon as traders watched oil surge by a couple dollars, the Dow managed to tack on another 50 points, which brings the five day total to almost 300 points.
The big stories of the day included the encouraging economic data, Greenspan�s comments on the economy and inflation, Merck�s victory in court, and oil�s rebound.
Mr. Greenspan also chimed in on the subject of the economy in his testimony before the U.S. Congress Joint Economic Committee. The Fed Chairman noted that although the recent hurricane activity will act as a drag on employment and production in the near-term, the economy �appears to retain important fundamental momentum.� But just about the time the cheers died down, Mr. Greenspan went on to provide caution regarding inflation. The Fed head said that while the economy has weathered the blow from the hurricanes, �more uncertainty, however, surrounds the outlook for inflation.� The �uncertainty� comment got traders attention immediately and bonds headed lower in response. The yield on the 10-yr T-Note finished the day at 4.64%, which is the high for the year as well as the highest level for the long bond since June 2004.
Today�s market, at least in the early going, is all about jobs. The just released payrolls report shows that job growth was lower than expected. Nonfarm payrolls increased by just 56,000 in October when expectations were for growth of 120,000. In addition, the report showed that the Unemployment Rate ticked down to 5.0% from 5.1% and the average hourly earnings upticked to a gain of +0.5% versus the consensus of +0.2%. The report also revised September�s job creation data to -8k which is better than the initial reading of -35k.
The Bureau of Labor Statistics also provided a special note in the report. In an attempt to clarify the issues of the hurricane and the accompanying revisions to data, the BLS stated that in some parts of the country job growth was �below trend.�
The bond market is reacting positively to the report as the yield on the 10-yr has dropped to 4.63%, which is down from the 4.67% level seen earlier this morning. Stocks have had a rather muted response as the report is kind of a mixed bag for equities. On the one hand, it is good that job growth is less than stellar in that it means the Fed may not need to keep raising rates. While on the other hand, any news showing that the economy is slowing isn�t really that great in the big picture.
At the current time stock futures are pointing to a flat opening, so it will be interesting to see which team claims victory today on the jobs data.
Stocks "In Play" This Morning:
(NYSE: TOT) � Earnings of EU3.13B vs. EU3.19B
MSFT, INTC, IBM, CSCO � Bernstein says long term growth will exceed those currently expected. Recommends MSFT, INTC, and IBM. Rates CSCO as Market Perform
(NYSE: CHL) � Upgraded at GS
(NASDAQ: MSFT) � NY Post reports Xbox 2 sold out on some websites
(NYSE: BYD) � Reports $0.57 vs. $0.51
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions:
To see David Moenning�s Trading Record, his (Strong Buy) List, or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI
After a flurry of economic data yesterday morning, the word on the floor seemed to be, �It�s all good.� The positive reports on the state of the economy added fuel to the bull�s fire and helped push the indices to their fourth gain in the last five days. While things got a little shaky in the afternoon as traders watched oil surge by a couple dollars, the Dow managed to tack on another 50 points, which brings the five day total to almost 300 points.
The big stories of the day included the encouraging economic data, Greenspan�s comments on the economy and inflation, Merck�s victory in court, and oil�s rebound.
Mr. Greenspan also chimed in on the subject of the economy in his testimony before the U.S. Congress Joint Economic Committee. The Fed Chairman noted that although the recent hurricane activity will act as a drag on employment and production in the near-term, the economy �appears to retain important fundamental momentum.� But just about the time the cheers died down, Mr. Greenspan went on to provide caution regarding inflation. The Fed head said that while the economy has weathered the blow from the hurricanes, �more uncertainty, however, surrounds the outlook for inflation.� The �uncertainty� comment got traders attention immediately and bonds headed lower in response. The yield on the 10-yr T-Note finished the day at 4.64%, which is the high for the year as well as the highest level for the long bond since June 2004.
Today�s market, at least in the early going, is all about jobs. The just released payrolls report shows that job growth was lower than expected. Nonfarm payrolls increased by just 56,000 in October when expectations were for growth of 120,000. In addition, the report showed that the Unemployment Rate ticked down to 5.0% from 5.1% and the average hourly earnings upticked to a gain of +0.5% versus the consensus of +0.2%. The report also revised September�s job creation data to -8k which is better than the initial reading of -35k.
The Bureau of Labor Statistics also provided a special note in the report. In an attempt to clarify the issues of the hurricane and the accompanying revisions to data, the BLS stated that in some parts of the country job growth was �below trend.�
The bond market is reacting positively to the report as the yield on the 10-yr has dropped to 4.63%, which is down from the 4.67% level seen earlier this morning. Stocks have had a rather muted response as the report is kind of a mixed bag for equities. On the one hand, it is good that job growth is less than stellar in that it means the Fed may not need to keep raising rates. While on the other hand, any news showing that the economy is slowing isn�t really that great in the big picture.
At the current time stock futures are pointing to a flat opening, so it will be interesting to see which team claims victory today on the jobs data.
Stocks "In Play" This Morning:
(NYSE: TOT) � Earnings of EU3.13B vs. EU3.19B
MSFT, INTC, IBM, CSCO � Bernstein says long term growth will exceed those currently expected. Recommends MSFT, INTC, and IBM. Rates CSCO as Market Perform
(NYSE: CHL) � Upgraded at GS
(NASDAQ: MSFT) � NY Post reports Xbox 2 sold out on some websites
(NYSE: BYD) � Reports $0.57 vs. $0.51
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions:
To see David Moenning�s Trading Record, his (Strong Buy) List, or the rank for any Top Guns Stocks, visit: http://www.AnotherWinningTrade.com/SI
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