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Stocks hover before key payrolls report

Stocks are little-changed ahead of today's key jobs report, one day after breaking into new record territory.

S&P 500 futures are up fractionally, matching similar moves in Europe. Asian markets climbed in the overnight session, led by a 3 percent gain by Japan's Nikkei. The recent strength in Tokyo could be a positive sign for the broader market because it was a key tailwind for sentiment earlier this year.

But in the near term, the big catalyst is the Labor Department's non-farm payrolls report at 8:30 a.m. ET. Economists expect that 195,000 private-sector jobs were added, while the national total is estimated at 175,000 because of government layoffs. Other key employment data has been strong this week, with ADP's report on Wednesday and initial jobless claims yesterday both better than expected.

Second-quarter economic growth also crushed estimates and factory indexes from the United States, Europe and China all beat forecasts. In addition, central bankers have given no signs of reducing easy-money policies. All of that adds up to a highly positive backdrop for equities.

Price action has reflected a willingness to take risk. Transportation stocks rallied more than 3 percent yesterday and small caps gained 1.4 percent. Both closed at new highs and outpaced the S&P 500's 1.25 percent advance.

There has also been a wide pattern of strength across the market, with no single sector dominating performance. Our proprietary researchLAB scanner shows outperformance recently in Chinese Internet companies, video-game makers, mortgage servicers and real-estate service companies. Luxury goods and consumer-discretionary industries, like casual-dining and makers of snowmobiles and speedboats, have also outperformed.

Copper has also been rebounding this week, while precious metals have continued their long-term declines. That's noteworthy because it reflects improved sentiment toward global growth--especially in China--but limited concerns about inflation. The pattern remains in effect today, as copper climbs about half a percent but gold declines almost 2 percent and silver sheds 1 percent.

Price action is mildly cautious in other commodities, with oil and most agricultural foodstuffs lower.

Yen weakness is the main theme in foreign-exchange trading, which is potentially bullish for equities. The euro is little changed, while currencies associated with global growth, such as the Australian and Canadian dollars, are down.

In company-specific news, insurance giant American International Group is indicated up 5 percent after earnings beat expectations and the management announced its first dividend since the 2008 financial crisis. Flooring supplier Mohawk Industries climbed 8 percent yesterday evening on a strong earnings report, citing improvements in the housing market. Dell is also higher after Reuters reported it's close to reaching a buyout with founder Michael Dell for $13.75 a share.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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