The Day Ahead: Futures Lower Ahead of Jobs

 | Oct 07, 2011 | 8:28 AM EDT  | Comments
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Jobs Report

This morning brings the eagerly awaited September jobs report from the Labor Department. Following three days in a row of hefty price gains, U.S. equities futures were trading lower in advance of the data.

Economists expect that employers added 60,000 jobs last month, with that number given a big assist by striking Verizon (VZ) employees who returned to work. The actual number has missed views significantly on several occasions recently, so a significant divergence in either direction has potential to affect stocks.

The report is due out at 8:30 a.m. EDT. The unemployment rate is seen remaining at 9.1%, and average hourly earnings edging up by 0.2%.

In the Headlines

European stocks were trading in negative territory early Friday, though losses were moderate rather than severe. Banks declined after Moody's cut its ratings on 12 U.K. banks, saying the nation's government will withdraw its support for the banks at some point in the future. Decliners outnumbered advancers in European trade.

Asian indices finished sharply higher, on growing optimism that European politicians and central bankers are taking more definitive steps to prevent a financial meltdown. That optimism translated into upside trade for Asia's banks, which have suffered lately on worries about European contagion. Markets in Shanghai have been closed all week for a holiday.

Economic Docket

In addition to the jobs report, other U.S. economic data today include wholesale inventories numbers from the Commerce Department. Economists are eyeing an increase of 0.7% in August. This report typically doesn't get much market attention. 

At 3 p.m., the Federal Reserve is set to report on August consumer credit. Analysts anticipate a rise of $8 billion, mostly on non-revolving credit, such as auto notes. However, credit-card borrowing is expected to show a decline.

Commodities Corner

West Texas Intermediate fell $0.47 in electronic trade, to $82.12 per barrel.

Gold was up $2.70 early Friday, to $1,655.90 per ounce. The precious metal has risen in the past two sessions, even as equities notched gains.

Silver dropped by $0.085 per ounce, to $31.92.

Copper gained on the general optimism about the European situation, and its global impact. Copper was up $0.047 to $3.29 per pound in electronic trade.

Early Movers

There are no significant U.S. corporate earnings reports scheduled today.

In premarket trade, Apple (AAPL) remained well within their weekly range, slipping $1.51, 0.40%, to $375.86. The stock fell a modest 0.2% Thursday following news of Steve Jobs' death, although trading volume was heavier than in the prior session. Shares are perched above their 200-day average, and below their 50-day.

A big decliner before the bell was Illumina (ILMN), shedding $11.23, a loss of 28.12%, to $28.70. On Thursday, the biotech gave a third-quarter revenue outlook that was sharply below Wall Street views. The company also suspended full-year guidance, pointing to market uncertainties. October is the stock's fourth month in a row of downside trade. Year-to-date, it's showing a loss of nearly 40%.

DJIA component Johnson & Johnson (JNJ) edged up $0.04 in the premarket, a fractional gain, to $62.85. The stock rallied in the past three days along with the broader market. Weekly volume in J&J has been below average since late August.

Beleaguered Bank of America (BAC), which was up 2.6% for the week heading into Friday's session, slipped $0.08, 1.27%, to $6.20 in early trade. After falling in each of the past seven months, the stock is showing gains in October.

Analyst moves early Friday included a Keefe Bruyette downgrade of IntercontinentalExchange (ICE), citing share price valuation. ICE has been holding above its 10-week moving average since mid-September.

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