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Weak Employment Report Pressures Dow Further South

Posted
1/10/2014 4:24:00 PM
By: Schaeffer's Investment Research
Referenced Stocks:CVX;FB;INTC;LNKD;MSFT

"This morning, it was all about the worse-than-expected jobs report and the market's reaction," noted Schaeffer's Senior Equity Analyst Joe Bell, CMT. "The major indexes initially sold off in response to this poor economic news, but many buyers came in and bought the dip. By the end of the day, most broad-market indexes finished in the green or near breakeven." The Dow Jones Industrial Average (DJI) , however, closed in negative territory for both the day and week.

Continue reading for more on today's market, including :

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The Dow Jones Industrial Average (DJI - 16,437.05) spent the majority of the day in the red, and ended up closing 7.7 points, or roughly 0.1%, lower. For the week, the blue-chip index shed 0.2%. The Dow's 15 advancers were led by Microsoft Corporation's ( MSFT ) gain of 1.4%, while Chevron Corporation ( CVX ) paced the 15 decliners with a loss of 1.9%.

Although the S&P 500 Index (SPX - 1,842.37) stayed in negative territory for much of the session, as well, the index eventually came back to finish 4.2 points, or 0.2%, higher on the day. Meanwhile, the Nasdaq Composite (COMP - 4,174.66) advanced 18.5 points, or 0.4%. On a weekly basis, the SPX and COMP added 0.6% and 1%, respectively.

Elsewhere, the CBOE Volatility Index (VIX - 12.14) trekked steadily lower throughout the day, and was off 0.8 point, or 5.8%, by the closing bell. Week-over-week, the "fear gauge" dropped 11.8%.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"After what would seem like terrible economic news, the market recovered quite well, for the most part," Bell continued. "After a lot of different intraday action during the past several sessions, the SPX finished slightly higher than where it started the week."

5 Items on Our Radar Today :

  1. The Labor Department said nonfarm payrolls increased by 74,000 in December -- marking the narrowest gain in three years, and falling considerably short of the consensus view. Meanwhile, although the unemployment rate edged down to 6.7%, the drop was largely due to a decline of labor-market participants. (MarketWatch)
  2. According to the Commerce Department, wholesale inventories in the U.S. rose 0.5% in November, compared to a downwardly revised 1.3% gain in October. Still, the latest figure exceeded economists' expectations for an increase of 0.4%. Excluding autos, inventories climbed by 0.6%. (Reuters via CNBC)
  3. Facebook Inc ( FB ) received an upward price-target adjustment after touching a record high during yesterday's session.
  4. The latest Option Idea of the Week explains why further gains could be in the cards for Hewlett-Packard Company (HPQ) .
  5. Put players pounced on Intel Corporation ( INTC ) ahead of earnings, including a spread strategist who utilized January-dated contracts.

EARNINGS

For a look at today's options movers and commodities activity, head to page 2.

STOCKS - NOTABLE CALL ACTIVITY

STOCKS - NOTABLE PUT ACTIVITY

Commodities :

Crude futures climbed higher today, thanks to promising import data out of China and a weaker greenback. The February contract gained $1.06, or 1.2%, to settle at $92.72 per barrel. For the week, however, crude shed 1.3%.

Meanwhile, gold futures also advanced on the day, as a disappointing nonfarm payrolls report boosted the precious metal's "safe-haven" appeal. As a result, February-dated gold tacked on $17.50, or 1.4%, to end at $1,246.90 an ounce -- marking the highest close for a most active contract since Dec. 11. On a weekly basis, gold edged 0.7% higher.

SCHAEFFER'S MARKET POSTURE