Good day! The market has had a tough time swallowing this week's economic data. Thursday's session was a choppy one as expected, thanks to the extreme selloff we experienced on Wednesday, but Friday is off to a rough start as well. The market did trade in a range throughout Thursday, but the range itself left a decidedly negative tone heading into afterhour’s trade following only gradual upside throughout the afternoon. Only the Nasdaq managed to hang onto some of those gains. Both the Dow Jones Ind. Average and S&P 500 ended the day in slightly negative territory. Retail stocks were amongst the worst performers for the day.
Dow Jones Industrial Average
Thursday morning's jobless claims report showed that the labor market remains highly unfavorable for job-seekers. Claims continued to remain above 400,000 for the 8th straight week last week with 422,000 Americans filing for first-time unemployment benefits. This was worse-than-expected. Those filing for ongoing claims did drop slightly... by 1,000 to 3,711,00. At these levels, few were left expecting any sort of dent in unemployment rate.
With the market already primed for selling from a technical standpoint, Friday's nonfarm payrolls report hit the market hard in early trade. The index futures were down sharply after the Labor Department announced the smallest increase in jobs (150,000) since last September and the unemployment rate rose to 9.1%. The numbers were even lower than the adjusted estimates following Tuesday's disappointing ADP report. Concerns are once again on the rise that we are heading into a double dip recession. We're already experiencing such a situation with the housing market.
Although Friday's session should not be as extreme as the selloff seen on Wednesday, the market will be favoring day traders since risk will be substantially increased for those holding over the weekend.
The Dow Jones Industrial Average ($DJI) ended the day with a loss of 41.59 points, or 0.34%, and closed at 12,248.55 on Thursday. Seven of the Dow's thirty index components posted a gain for the day. The top performers were Caterpillar (CAT) (+0.94%), Alcoa (AA) (+0.68%), and Boeing (BA) (+0.45). The weakest performers were Wal-Mart (WMT) (-1.38%), Chevron (CVX) (-1.34%), and Coca-Cola (KO) (-1.08%).
The S&P 500 ($SPX) loss of 1.61 points, or 0.12%, and closed at 1,312.94. The strongest percentage performer in the index was Decry (DV) (+14.58%). It was followed by an 11.16% gain in Apollo Group (APOL). Joy Global (JOYG) (+5.39%), Washington Post (WPO) (+5.04%), Glenworth Final. (GNW) (+3.95%), and Motorola Mobility (MMI) (+3.17%) rounded off the top five. Sealed Air (SEE) (-6.04%), Supervalu (SVU) (-4.58%), Prologs (PLD) (-4.28%), and Tyson Foods (TSN) (-4.18%) were the top percentage losers.
The Nasdaq Composite ($COMPX) ended the session higher by 4.12 points, or 0.15%, on Thursday and it closed at 2,773.31. Apollo Group (APOL) (+11.16%), Joy Global (JOYG) (+5.39%), Badu (BIDU) (+4.54%), and Vertex Pharmaceuticals (+2.79%) were the top gainers in the Nasdaq-100. Express Scripts (ESRX) (-1.71%), Intuit (INTU) (-1.58%), Micron Technology (MU) (-1.57%), and Costco (CSCO) (-1.41%).
There will be no Monday update
Unless otherwise stated, the index action described in this article relates to the E-mini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.
Toni Hansen is president and co-founder of the Bastiat Group Inc., DBA Trading From Main Street. Toni is one of the most respected technical analysts and traders in the industry. She has been trading and educating new traders, money managers, professional market analysts and traders throughout the boom and bust of the last decade. She has worked in conjunction with some of the world's top financial exchanges. Learn more about Toni Hansen and the educational services she provides through her website at http://www.tonihansen.com.